Disability Insurance: Features

When purchasing or qualifying for a Disability Insurance policy, keep in mind that there is no such thing as a standard Disability Insurance policy.

Following are the basic features to note:

• Cost
• Pre-Existing Condition Provisions
• Total Disability Definition
• Elimination Period  
• Benefit
• Offsets
• Survivor Benefits
• Partial Disability or Residual Benefit
• Recurring Disabilities Provision
• Mental and Nervous Limitation
• Other Exclusions and Limitations
• Waiver of Premium
• Conversion Privilege
• The financial soundness of the insurer

Whether or not your benefits are taxed depends on how the premiums were paid. Either the premium or the benefits will be taxed, but not both.

• The type of individual disability insurance policy. The most common are known as "Guaranteed Renewable" and "Noncancellable."
• The definition of "total disability."
• Whether the policy covers "partial disability" (also known as "Residual Disability").
• The length of time from the disabling moment until payments begin (known as the "Elimination" or "Waiting" period).
• The benefit amount, and maximum period during which it is paid.
• The exclusions and limitations.
• Whether the policy covers partial disabilities.
• What happens if you return to work and become disabled again.
• Other features common to Disability Insurance policies.

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