Disability Insurance

Every day, millions of Americans work hard to earn a living to support themselves and their families. But what if unforeseen circumstances prevented you from earning your daily wages? Accidents and illness can occur at any time. Even if your income suddenly dries up, your bills will not.

Therein lies the value of purchasing disability insurance.

This kind of supplemental insurance coverage provides various levels of income protection should you be unable to work because of an accident or illness.

“If you get hurt and couldn’t work, what would do you for money?” Tim Woodard, an Aflac Regional Sales Coordinator in suburban Portland, asked his customers. “If you don’t have [enough savings] and you’re a family person, what happens to your family? What’s your income replacement?”

An employer will often provide some disability coverage within their general insurance policy. Employees can layer an additional disability policy from a private insurance provider like Aflac or Mutual of Omaha to ensure maximum coverage.

While your gross annual income determines your maximum amount of purchasable disability insurance, the premiums are based on your age, tobacco-usage, occupational risk and responsibilities.

Occupational risk is classified by the insurance industry and rated on a scale of 1A to 6A, from most to least dangerous.

Applicants seeking short-term disability coverage can purchase six-month terms of accident only protection or accident and sickness protection.

Long-term coverage packages span two, five or 10 years, or until age 67, but only include accident and sickness protection. Most people select two-year terms, said Nancy Anderson, a Mutual of Omaha agent in suburban Chicago.

Upon purchase, employees must choose an elimination period, or the number of days before the insurance policy kicks in. Options include zero, seven, 14, 30, 60 or 90 days.

So, if you chose a policy that had a 14-day elimination period, your benefits would go into effect two weeks from the day your accident happened.

Of course, average monthly costs vary greatly depending on individual circumstances and level of protection preferences. The maximum estimated cost of a two-year accident and sickness coverage policy with an elimination period of 30 days for a 45-year-old, non-smoking city police officer (a class 3A job) with $75,000 annual income is roughly $174 per month, according to Anderson.

While disability insurance often provides income protection for individuals, it can also protect small and medium-sized businesses.

Two brothers own a tannery near Dallas. One fields phone calls and takes orders; the other tans the leather in the back. Not long ago, they purchased disability insurance from Jason Adams, a Mutual of Omaha agent in Arlington, Tex., who had suggested it to protect their business in case an accident occurred.

Sure enough, one of the brothers was involved in a car accident and could not work for nearly a year. The income that their disability insurance provided allowed them to replace the manpower that was lost, and keep their tannery operational.

“Without that, who knows what would have happened to the business?” Adams said. “The need was imminent, they just didn’t realize it.”

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