Insurance

The importance of short term and long term disability insurance

The husband of my wife’s best friend (and friend of mine) recently found out that he has been diagnosed with Hodgkin’s Lymphoma. As a manual skilled laborer and union member, his benefits are tied to his working, in that he must accumulate a certain amount of hours to be eligible for his health insurance and pension benefits. His union does not offer short-term or long-term disability, and although I’ve never discussed it with him – maybe he never knew this type of insurance existed. Many companies do not offer disability insurance either, you must go out and purchase it on your own. Even when companies do provide the insurance, the worker typically pays the premium. Below, I will outline what this insurance is and what it covers, and why it’s so very important to have it if you don’t. I also provide a list of companies where you can purchase it and what you can expect to pay for it.

It’s unfortunate to have to spotlight a friend of mine’s bad situation to highlight the critical importance of having this insurance to help maintain one’s ability to provide for their family when some unexpected illness occurs. My friend and his wife have two children, and they both were working and doing just fine. One day, my friend noticed a lump in his neck and decided to go and get it checked out. The results of the biopsy were shocking and life changing when he found out he had stage 2 Hodgkin’s disease. He would have to stop working immediately and undergo chemotherapy for the next 6 months, with radiation a looming possibility if the chemo doesn’t cure his cancer. He would be unable to care for the youngest child therefore requiring daycare expenses. His wife will continue to work to help support their monthly mortgage payments and other needs. However, because he will not meet his labor requirements, his insurance premiums will potentially increase significantly. Moreover, he no longer has an income to help meet the family bills. He’s in a flat-out horrible situation with no where to turn. Fortunately, we have a good community rallying around the family and my wife is sponsoring a charity event for the family. But that money will in now way come close to replacing his lost income and increase in bills related to medical care.

So what is short-term and long-term disability insurance and what does it cover? In a nutshell, short-term disability insurance generally pays between 1/2 and 2/3 of the individual’s pay due to a disability that prevents work and the coverage lasts from 3-6 months. There is typically a cap on the payment and policies vary widely. Long-term disability is the same except it usually pays out between 2-5 years, with some paying benefits through age 65 or longer. Think of this insurance as income protection  – when you can’t work, this will help you pay your bills.

How much does disability insurance cost?

According to UNUM, “the cost of coverage varies and is based on the type of policy, insurance carrier and other factors, but here are some examples:

Group insurance that is purchased by a business as an employee benefit averages $228 per employee per year for long-term disability and $192 per employee per year for short-term disability[3]. The employee usually pays nothing or a small amount for this coverage.

Rates for short-term disability products that are sold directly to employees at the workplace may benefit from group discounts. For example, a 35-year-old light blue collar worker could choose a policy that provides a $2,000 a month benefit for 12 months for a covered disability. The average monthly premium for this policy would be $58[4].

Here is an example of an individual policy that may be purchased through an independent insurance agent. A 40-year-old professional man who makes $50,000 a year would pay about $1,700 a year for a policy that would pay him $2,900 a month for up to five years for a covered disability.”

Where are some places you can get this disability insurance?

• Hartford Life
• Aflac
• Lincoln Financial Group
• Unum
• Aetna
• MetLife
• Cigna
• Reliance Standard
• Standard
• Prudential

I hope this article helps you consider getting the necessary insurance you need to help cover your family in the event of an unexpected illness or injury. Not to mention, short-term disability covers things like pregnancies! Take the time to look into this and see if it makes sense for you and or your family.

3. JHA 2005 U.S. Group Disability Market Survey, 2006.
4. Voluntary Short-Term Disability Plans Participant Summary, Eastbridge Consulting Group, 2005.

Top insurance companies for your needs

Where To Start When Shopping For Insurance.

The insurance market is driven by two customer requirements. First, insurance buyers want their own individual ‘peace of mind’ needs met by their insurance policies. Second, insurance buyers want to know that they are not paying more than necessary for any particular policy. The Internet has revolutionized the insurance market because it gives a complete and detailed overview of all top insurance companies and their offerings. So if you are in the market for life insurance, auto insurance, health insurance or property insurance you can compare at a glance all of the top company offerings.

To make the Internet work for you it is important to actually know what your insurance priority needs are. For example, when it comes to life insurance do you want ‘term’ life insurance, ‘permanent’, or universal life or variable universal life? Term life is the original insurance product and means a lump sum payment is made to your beneficiaries if you die while the policy is in force and as long as it is paid up to date. It has regular premiums for an agreed period of time, ‘the term’ in fact.

Top insurance companies have embraced the Internet revolution too. Buyers can search for the best – which really means the cheapest for $1,000,000 of life cover – insurance companies and be shown the top 10 or 15. This kind of general public access to information really makes the market competitive. Companies are then listed in order of their premium costs with the most competitive at the top and the most expensive at the bottom.

Top insurance companies with excellent financial ratings are listed on comparison websites. These ratings, from companies such as A.M.Best, are an indicator of a life insurance company’s financial health because the ability to payout on a death claim is a key requirement of the policy shopper. Generally, an A rating or higher means companies have very good financial strength.

Health insurance is a much more complex product than life or auto cover. There are many companies who specialize in locating affordable health insurance for individuals without any. The starting point for the buyer here is to provide these companies with your budget requirements and they will use their experience and knowledge to find an affordable health insurance policy for you. Many people are turned off by high health insurance premiums when faced with the complexity of offerings from the top insurance companies. Too often they find a policy with an affordable premium only to discover that the deductible is just too much.

Lots of differently weighted factors go into a health insurance premium quote and policy. For example, if you are on the young side of life, in reasonably good health and only looking to insure you, you will find a reasonably inexpensive plan. Obviously the bigger the family you are seeking to insure or someone has a pre-existing health condition such as asthma or osteoporosis, the insurers will be asking for more money.

But do not despair if you do have a chronic health condition, you still have choices. For example, do not assume that having a higher deductible will save you money on your monthly premium. If you require routine medical consultations or doctor visits, as well as various medications on a monthly basis, it may be economical for you to pay a higher monthly premium with a reduced deductible.

Various companies in your area may include Blue Cross Blue Shield among many other, it truly depends on your area unlike the top auto insurance companies and life insurance companies which we’ll talk about below.

Auto insurance begins with your vehicle and then the Internet. Of course your policy covers any money lost when you have an accident because it is a contract between you and your chosen auto insurance provider. Your side of the contract is to pay the premiums while the insurance company contracts to pay the costs as agreed in your policy. Auto insurance also covers property loss or damage, liability and medical expenses. Your specific needs in these three areas will determine your choice of policy but at the best price too.

The property coverage is about damage to or loss of your vehicle.

Liability coverage is for your legal responsibility to other people for personal injury or property damage. Medical coverage is for the cost of treatment to injuries, therapy and if agreed, lost working time and heaven forbid, funeral expenses.

A comprehensive auto insurance policy can have up to six specific types of coverage. It is a legal requirement in some countries to have some of these coverages, but not all. Remember too that if there is finance loan on your car, the lender may insist on some payment protection requirements. The term of an auto policy will normally be for a half or a full year, however many companies offer month to month, but the rates are typically higher the lesser amount of time paid up front.

Some of the top auto insurance companies include, but are not limited to: Geico, Progressive, State Farm, and various more. Check Progressive as they will tell you all the rates of their competitors.

Life insurance starts with your requirements and the Internet comparisons can answer all your questions and get you the best deal. For health insurance it is important to start with your budget and use a specialist to find what is affordable and best for you. Auto insurance starts with your vehicle the Internet and it’s all about negotiation from there. Many companies will offer their own policies however companies like Northwester Mutual Life offer various competitive rates and have excellent service.