It is not surprising that many consumers believe that long term disability insurance is the only type of disability insurance available. Long term is by far the most common type purchased by consumers as well as the most common type offered by employers and membership organizations. However, there are short term disability insurance polices on the market and they can be useful when needed. This article examines some of the more common aspects between the two types of disability insurance.
As mentioned above, long term disability insurance is the more commonly used type and it protects you should you become disabled through illness or injury. These policies usually begin to take effect once any short term disability policies end. The phrase “long term” can be misleading as some of these policies may only last 5 or 10 years. If you have the option, you want one that covers you until age 65.
Short term disability insurance, on the other hand, will cover a certain percentage of your lost salary if you are injured or become too ill to work. These benefit payments usually begin once your sick leave pay runs out.
Short term benefits often vary as time passes. Early on you will probably receive a large percentage of your usual pay, but as time goes on this amount may decrease. In many cases, short term policies last for six months or so before they are terminated.
It should be noted that short term disability insurance can come to you in many ways. For example, sick leave from work can be considered short term in nature. Worker’s compensation is also another form of short term disability insurance. In fact, worker’s compensation may be the most well-known type of short term disability insurance. individual accident insurance policy Most employers are required to provide worker’s compensation benefits that replace a portion of your income if you are unable to work, due to an accident that occurs in the workplace or while on company time doing company work.
Your automobile insurance may also be a type of short term disability insurance if they pay you for injuries sustained in an accident. Of course, if the other driver is at fault, you may be able to recover damages from them or their insurance company.
Long term disability insurance is quite another type of insurance altogether. Long term policies may not begin until you have exhausted all other shorter term services, but once it does begin it is truly for the long haul, meaning years. While short term policies are used to help you get through a rough patch, long term is used to help you keep your home, your automobile, and your lifestyle.
Short term disability insurance is usually provided to you through secondary means, such as through your employer’s participation with worker’s compensation or through your automobile insurance. Long term disability insurance, on the other hand, is bought as its own entity. This purchase can be through your employer or it can be purchased by an individual in which case it is known as private long term disability insurance.
What Is Critical Illness Insurance?
In short, a critical illness insurance policy is very much like any other insurance policy you take out. Here, however, your premiums go towards insuring that you do not contract a critical illness. In the event that you do contract a critical illness, your UK insurance provider will pay you out a tax-free lump sum to help you cover the day-to-day costs of having to live with your new medical condition.
Are There Any Limitations With Critical Illness Insurance?
Yes; it is essential that you look at the list of critical illnesses that your insurance policy covers, as these will be the only illness under which the policy will pay-out. In other words, the UK insurance provider will not pay-out on the policy simply because you have a doctor’s certificate that you have a critical illness, affordable critical illness insurance it needs to be one of the designated critical illness.
Moreover, if you are considered by the UK insurance provider to be a high risk– for example, if you smoke– then it is likely that either you will not be able to obtain the critical illness insurance, or your insurance premiums will be significantly higher than if this were not to the case. Importantly, you will need to disclose whether or not you have any existing conditions, lump sum cancer insurance in which case these will likely not be included, and whether or not your family has a history of the illnesses set out in the policy, in which case this will likely affect your premium payments.
How Will I Be Paid?
As mentioned, with a critical illness insurance your UK insurance underwriter will pay you out a lump-sum tax free amount once you contract one of the critical illnesses listed in the policy. Having paid out the lump-sum amount, your relationship with the UK insurance provider will come to an end. In other words, you will not have an ongoing relationship with the insurance provider paying you intermediate payments.
Is It Worth Having Critical Illness Insurance?
The question of whether or not there is any value in you having a critical illness insurance will depending largely on your age, expenses, and whether or not you have any other insurance. Essentially, critical illness insurance covers an area for which other types of insurance can be obtained. However, unlike other types of insurance, this is a very specific insurance policy paying out for a very specific purpose. That said, there is a strong argument that you can never really have too much insurance and will numbers seemingly showing that more and more of us contracting critical illnesses as we grow as an aging population, this type of UK insurance is always useful.
The benefits that you receive if you become disabled will be tax-free, as long as you paid the insurance premiums with after-tax money. Another benefit to having private coverage is that the coverage is not bound to your job. In other words, if you change jobs your coverage does not end as would be the case with most group coverage policies.
If your occupation allows for exceptionally high earnings you may need to purchase a special type of private long term disability insurance that will lock in that level of earning should you become disabled. Most group policies use what is known as the “any-occupation” scheme which allows for the less expensive premiums, but also provides a lower amount of benefits. High earners need to take this into consideration when thinking of long term disability insurance.
There are some important things to look for in private disability insurance: You want a policy that is “non-cancellable”. This guarantees that premiums will not be changed as long as you pay them on time and in full. You also want to look for a policy that is to age 65.
You want to avoid policies that are termed as “accident only”. These polices will not pay if you become disabled through illness rather than injury, and some of the accident conditions can be hard to meet.
There are a number of riders that can be bought with most private long term disability insurance and you should go through those carefully as some of them can be very important. Most riders will cost a bit more to implement into the policy but they can be worthwhile should you ever need to use them.