As you build a life, a certain amount of money has to come in the door every month, no matter what. But what if your health doesn't hold up and you are forced to change how you work or retire early?
Having disability income insurance gives you choices. The challenge is getting enough of it to maintain your lifestyle and, if you have a good career, you will want a specific kind of policy that allows you to stay in control of how you work or choose not work at all.
Disability Income Insurance Products
Exactly what defines "disabled" determines how much choice you have to work on your own terms. The better your career, the more important it is to control your own destiny with a high quality definition of disability.
Your occupation will influence which carrier and definition type will be recommended. Learn more about how to choose the definition of disability you need in a Disability Income policy (opens a new tab).
How the Benefit Amount is Determined
Individual disability income policies are structured to pay benefits as a fixed dollar monthly indemnity amount, such as $10,000 per month. You can select any policy size you want, but it cannot be greater than the amount you financially qualify for, which depends on:
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earnings history
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other coverage currently in-force
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insurance company guidelines
Future earnings have no bearing on the Total Disability benefit amount, which requires no calculation at the time of claim. Future earnings may affect benefits for claims based on loss of income.
Fixed dollar monthly indemnity benefits are superior to percentage-based formulas characteristic of group coverage because earnings often decline in the years leading up to claim for health reasons.
Eligibility
How is eligibility for individual disability insurance determined?
To qualify for individual disability insurance, insurers want to see that you are:
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Not currently disabled
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Employed or self-employed in an insurable occupation
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Actively at work full time, which is generally defined as 30+ hours per week at the time of application, notwithstanding normal time off.
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Under age 60, but a few go to age 64
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A U.S. citizen or green card holder (with some exceptions)
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Not routinely exposed to extreme hazards (with some exceptions)
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Dependent on work earnings, as opposed to being in a position to comfortably retire
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Under-insured relative to earnings, and
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Healthy
Exactly what this means varies from carrier to carrier. Matching you up with a carrier that is friendly to your circumstances is one of our most important functions, and is where the process begins.
Changes in circumstances post-issue do not jeopardize eligibility until age 65 or so, when the Guaranteed Renewable period typically expires. After age 65, or whenever the Guaranteed Renewable period expires, work status has to be attested to on an annual basis.
Alternative Products That Are Easier to Qualify For
If you are certain that qualifying for Disability Income (DI) insurance is not in the cards, consider these alternative products that transfer risk more selectively.