Disability Insurance and COVID-19: What You Need to Know.

Protecting your income has become something on many people’s To-Do list since the COVID-19 pandemic struck. People who never thought about the importance of disability insurance now see how fragile our health is and how unforeseen things can derail our ability to work and earn an income. Insurance companies are now overrun with applications for life and disability insurance as people scramble to secure coverage.

Here are the most common questions we’re seeing in working with people on disability insurance as it relates to COVID-19.

  • Does disability insurance cover me if I can’t work because of COVID-19?
    • There are no major carriers that have any exclusions of coverage for COVID-19; therefore, if you were sick, under a doctors care, and unable to work due to COVID-19, you could be eligible for benefits after you’ve met your elimination period.
  • If I have disability insurance at work, do I need a personal policy as well?
    • We would recommend it. Coverage most people have at work only covers about 60% of your salary. It is also usually taxable when received, so the effective replacement of your income is less than 50%. That’s a bigger pay cut than most people would like to experience, so having a personal policy that supplements your LTD at work is often a good idea.
  • What features should I have on my disability insurance policy to make sure I’m protected?
    • We always recommend getting a policy that has the following provisions when available:
      • Own occupation coverage
      • Partial disability coverage
      • Level and guaranteed rates
      • Benefits payable to age 65
  • How much disability insurance should I have?
    • Insurance companies typically will offer you a policy for about 60% of your income. If you have other coverage at work, or personally, they may approve you for a smaller supplemental policy. The benefits from an individual policy are usually tax free as well.
  • How long do I have to be out of work before benefits are paid?
    • Disability insurance policies can be designed to start paying benefits anywhere from 7 to 180 days after a disability. The normal waiting period is 90 days, as this provides the best value. The shorter you go on the waiting period, the more expensive the policy.
  • How long are benefits typically paid for?
    • Many disability insurance policies pay until you’re either back to work full time, or age 65. There are also shorter options which can reduce the cost. 
  • If I am out of work because of COVID-19, but not sick, can I still receive benefits?
    • No. You have to be sick or injured and under the care of a physician in order to claim benefits from a disability insurance policy.
  • If I am not working full time because of COVID-19 shutdowns, can I still apply for a disability policy?
    • Not yet. You have to be working at least 25-30 hours a week in order to apply for a disability insurance policy.

While there are many other frequently asked questions about disability insurance, these are the most common ones we see related to COVID-19. This pandemic has shown us all that we need to protect ourselves and our loved ones from things we can’t control. The best way to do that is to have the right amount of life and disability insurance so that our families financial futures can be secured.

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