Disability Income Insurance
You may never imagine being disabled, but you could picture the consequences.
Without an income, most people's savings are rapidly depleted as they struggle
to meet expenses. Many begin to suffer severe financial problems, as the
disability lingers on. This means many working people may need the financial
protection disability income insurance provides at some point during their
lives.
Key Points to Consider While Looking for a Coverage
If you are a highly paid professional, there are great differences among the
types of disability plans available for income protection. You may want to pay
attention to these definitions:
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Own Occupation: Defines disability as a condition that prevents you from
performing the major duties of your occupation, even if you are able to obtain
some other kind of work
-
Any Occupation: Less favorable definition of disability states that you are
disabled if you can’t work at any gainful occupation for which you are suited
by training, education or experience.
-
Modified Own Occupation: The insured is defined totally disabled, if he or she
is unable to perform substantial duties of any occupation.
How Each Plan Works
How each company defines disability is important to consider. A policy with
better partial income loss coverage and return to work benefits is recommended.
Suppose a heart surgeon earning $500,000 per year suffers an injury to his
hands. The injury keeps him out of the operating room, but he takes a job as a
medical director for an insurance company where he earns $150,000 each year.
According to definitions by Any Occupation and Modified Own Occupation, he is
not disabled. He also is considered to have a gainful occupation, even though
his income is greatly reduced. Under the Own Occupation definition, however,
the surgeon would be considered disabled and would receive full benefits. Those
benefits would help him make up $350,000 drop in his annual income.
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