Disability Insurance

Most people sometimes do not look at disability insurance as important as it should. For those who are not yet familiar with it, disability insurance pay an insured person a replacement income usually in the range of 45 to 65 percent of their current earnings. Statistics Disability Insurance suggests that the chance of you getting disabled is greater than that of your house on fire or you getting into a serious accident. You life insurance companies or health insurer may be able to help you get a disability insurer.

There are basic ways of replacing your earnings or income. One of them is through employer paid disability insurance. Most employers provide short term and long term income replacement. For most employers they will put you on long term disability immediately after the short term expires which is normally six months. The benefits that they pay are usually between 45 to 65 percent of your total earnings. The employer paid benefit is taxable. Any enhancement to the plan which is usually about 20 percent will be tax free benefit.

Another way of getting income replacement is through social security disability benefits. Here the workers are paid for disability that is expected to last at least twelve months. And it is so bad that they cannot perform any gainful employment for that said period of time.

Another agency or department where you can avail of income replacement is the workers compensation. Here if your injury is job related, you can apply for disability benefits. Any injury that happens in the work place should be able to avail of the workers compensation benefits. It does not limit to injury, it includes any illness you may have contracted while working at your job site.

Most mid size and large companies or employers offer both short term and long term disability insurance. But there is no law that require your employer to provide you with long term disability insurance. So if you work for a large company you are probably covered with long term disability. Usually the short term will pay you from a week to six months. These you have to check with your employer if when you can start receiving and for how long.

For some people they always try to enhance their disability coverage. Normally larger companies offer enhancements on top of the basic coverage which is paid by your employer. The company paid basic coverage is taxable just like income. The enhancement that you may pay for more coverage will not be declared as taxable.

Getting disability insurance should not be taken off your financial planning. You might get disabled and nothing is more comforting than to know that your income will still come regardless of how much it would be. That income replacement will be needed because you still have to pay your bills and debts - disabled or not.

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