Whether you are signing up for disability insurance through your employer’s benefits package or you are discussing coverage with your Maryland disability insurance agent, don’t forget to ask these important questions. Disability insurance can be confusing, so it’s important that you understand the coverage and make sure it meets your current and future needs.
What percentage of my income will be replaced?
This is a very important question, because it will determine whether this policy is even a viable option for you. Let’s say only 40% of your income gets replaced—is it enough to pay your bills and survive while you are recovering? A related question you should ask is what is considered income under this particular policy. Do tips, commission and bonuses count as income? What if you are self-employed or a freelancer? Be sure to clarify this before you sign the policy!
Are there any payout limits?
Some disability insurance policies may put a cap on how much money you can receive in a year, in a month or in total. They may also limit the total duration of the payout period. This is good to know, so that you can compare it to your average living expenses.
Are my premiums or my payout taxed?
If you are getting your disability insurance through an employer, they are likely paying your premiums and deducting this amount from their income. This means if and when you file your claim, the benefits you receive will be taxed. If you are paying the premiums yourself, you may be able to choose whether to pay taxes now or later.
How do you define a disability?
Read the definition of disability carefully and make sure you understand it. Some insurance companies may define disability as a condition that prevents you from working at your current position. Other policies, on the other hand, consider it a disability if you are unable to perform any job at all. So if you are a construction worker and tear a ligament, you can’t keep climbing walls and carrying 2x4s, but you can do most types of computer jobs, which by the latter definition doesn’t make you disabled.
Is my policy renewable?
When talking about policy renewal, ask whether you get to keep your initial rate or if the company has the right to raise it. Some policies are also non-cancelable, which means the insurer can’t drop you just because you made a claim.
Is there a waiting period?
Some policies may have a waiting period between the time you sign up and the time you can start using your policy. You might also have to wait for your payout after getting your claim approved. Knowing this will help you make any other necessary arrangements to make sure you can maintain a good quality of life even with a disability.
What if I get another job?
If your policy premiums are paid by your employer, you should ask what happens if you quit or get fired. Will you be able to pay the premiums on your own at the same rate or will you need to get a new agreement?
Does the policy have exceptions?
Find out whether there are specific injuries or circumstances that your policy won’t cover. What about pre-existing conditions? In some cases, a policy may allow them to disregard pre-exisitng conditions after a certain “quarantine” period.
Is there an offset for supplemental coverage?
Let’s say you have a second, supplemental disability insurance policy. Or maybe you will apply for the federal Social Security disability benefits. Will your current policy reduce its payout based on your other sources of income or can you enjoy your full benefits?
What would you recommend for my age, health and occupation?
One of the benefits of working with your Maryland disability insurance agent is that they can help you choose the right policy. After shopping for disability insurance for a bit you will realize that no single policy may 100% meet your needs. That’s when it helps to get professional advice. At Freedom Insurance Agency, we work with several disability insurance providers and can help you compare different policies side by side. Depending on your age, health and occupation, you may need more or less coverage in certain aspects.
Feel free to give us a call or contact us online for a free consultation.