Disability Income Insurance: Individual: 101

In Sum: An individual long term disability income insurance policy can be difficult to obtain post diagnosis. As a general matter, individual disability insurance policies are not available to people who have had any medical treatment during the past 7 - 10 years for a potentially disabling medical condition. To learn what may be available in your state, contact an experienced insurance broker. You do not have to disclose your name. The broker can find what is available for an anonymous client with your medical history. Or contact insurers directly. A list of providers is available at: http://yourincomeatrisk.org , a website of America's Health Insurance Plans, a national asociation of the insurance industry.

Ideally, look for a policy that is at least Guaranteed Renewable/Noncancellable, has a benefit that equals the difference between your projected income and expenses on disability, and provides coverage for your "own occupation."

Once you have a policy, do what is necessary to maintain it. The income can be critical in the event you are no longer able to work.

Whether benefits are taxable depends on whether the policy is paid for with pre-tax or after tax dollars.

When considering an Individual Disability Insurance policy, consider:

• The type of individual disability insurance policy. Look for the type that is "Guaranteed Renewable" (so you can renew the policy as long as you want) and "Noncancellable."
• The definition of "total disability". (Own-occupation; Any Suitable Occupation; Presumptive Disability) 
• Whether the policy covers "partial disability" (also known as "Residual Disaiblity").
• 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.
• Waiver of premium
• What happens if you return to work and become disabled again.
• Other features common to Disability Insurance policies.

When trying to determine what to look for in a policy for yourself, see: Disability Insurance: Things To Think About When Purchasing. If you are able to get quotes about more than one policy, see: Disability Insurance: Evaluating Individual Policies.

Also:

• Understand the tax implications whether you pay the premiums for the Disability Policy from pre-tax or after tax dollars.
• Check the insurer's financial situation to be sure it is sound (so it will be here to pay if you file a claim.)

When you apply for an individual policy, you are likely to be requested to take a medical exam in addition to supplying a completed application and medical records. (For additional informabout about what to expect when you apply for a policy, click here.)

To keep your policy in force (in existence), see: Disability Insurance: Maintaining Your Individual Policy.

If you need to file a claim under a Disability Insurance Policy, see: Disability Insurance: Claims, and Disability Insurance: Appeals.

NOTE:

• For information about Group Disability Income Policies, click here.
• For an overview of DisabilityIncome Insurance Policies, click here.

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