10. Disability income insurance provisions and costs

Answer the following questions about the provisions and options available for disability income insurance.

Selecting a Disability Income Insurance Plan

Degree of disability

Brian loves his job, and, if he becomes disabled, doesnt want to do any other job. Yet, hell need an income. Even though it will cost him more, he will buy ________ disability policy.

The cost is more because the insurer has __________ flexibility when determining if the insured is eligible for coverage.

Benefit period

Upon retirement at age 65, Brian expects to collect a pension, Social Security, and draw on his IRA. His best friend works under the table and has a small IRA. Brian will most likely buy a disability income insurance policy that covers him _________ . He will suggest that his friend purchase a policy that provides coverage .

Brian made this choice and this suggestion because the purpose of disability income insurance is to provide funds when income is lost due to illness or injury. If he becomes disabled after he retires, he ________ lose his pension, Social Security, or IRA income. If his friend becomes disabled, the small IRA is to be sufficient to provide for basic necessities while hes unable to work. Additional income-____________ be necessary to pay the simplest expenses.

Waiting period

Eileen has had a disability income insurance policy for many years. She has a rainy-day emergency savings account that would support her for 3 months. If she loses income due to injury or illness, she plans to use these funds until the 90-day___________ period expires, after which she___________ begin receiving benefits from her disability income insurance policy.

Length of coverage

Jared has a great job that pays well. He plans to work all his life. His only source of income is his paycheck. He takes trips and enjoys other extras in life. Since becoming disabled can bring financial ruin, Jared should strongly consider purchasing disability income insurance. It is most important that the policy include a____________ clause.

A _____________ clause would increase his benefit to keep up with inflation as long as he has coverage, but a _____________ clause ensures he will always have coverage. Without this clause, if the insurance company canceled his policy and he became disabled, hed lose a lot ______________ without any coverage than he would have had he collected benefits without adjustments for inflation.

Gender

Because womens life expectancies are longer than mens, one would expect the cost of premiums for disability income insurance with the same terms to be___________ for a woman than a man. Also, for a woman to pay approximately the same premium as a man her age for coverage, she has to purchase a policy with ____________- restrictions than a mans policy.

Social Security disability benefits

There are stringent requirements to qualify for Social Security disability benefits. ____________ of those who apply are rejected. To provide benefits that would have come from Social Security, guard against rejection by ___________ a Social Security rider when purchasing a disability income insurance policy.

Adjustments

All this research is exhaustingBrian wants to buy his policy and not have to review his coverages for a long time. The best policy for his peace of mind will provide benefits ___________ . He expects to have a lucrative career with frequent and substantial pay increases. Hell also make sure his disability policy pays a stated .

In conclusion, its important to learn how to choose the right policy that provides _____________ coverage at an affordable cost.