Expectations vs Reality of Disability Insurance

The idea behind Disability Insurance sounds great. You are insuring that in the event you are unable to work, then you will be covered from an income perspective. This seems great for families whose survival relies on the income of one family member especially. An unexpected event could wreak havoc on a family. However, sometimes things sound better than they seem.

Expectation: I pay my premium for disability insurance and I will get the benefits.

Reality: You are not entitled to the benefits of your plan

It is true that you will pay your premium into a program, but unfortunately that doesn’t mean that if you get hurt or become disabled that you will be entitled to the benefits. Each plan has terms that need to be met to receive the benefits. Say you were to get hurt, your policy may not deem that injury a disability and therefore not be covered. You need to be conscious of this when entering into a contract to know what exactly you are covered for. What is the plan’s definition of a disability? A physician will need to be involved and proper diagnosis and plan will need to be determined prior to a claim. Insurance companies make money by not paying claims. They have people who are risk assessors to make sure they are not taking on risky clients. They can not be depended on to actually payout claims.

Expectation: With Disability Insurance, you get paid even though you are too disable to work.

Reality: You only get a portion of what you make.

Being on disability doesn’t mean you can make what you normally make while being disabled. You only receive a portion or percentage of your typical earnings. A typical number would be about 60% of pay. Plans can also take other sources of income into play which would reduce your payout even more. Companies and the government do everything in their power to detect fraud so it is important to know that you can be (and often are) caught.

All of this just means that you need to make sure you find the right fit and have the right expectations for you and your family when it comes to disability insurance. 

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