Permanent Disability Insurance

Although there are six states that have regulations mandating that employers provide some form of disability insurance to their employees, the duration and amount payable upon becoming disabled varies from state to state. Most often that amount is only between fifty and sixty percent of the insured’s wages, which doesn’t amount to much when trying to maintain a household. However, permanent disability insurance can provide greater benefits for longer durations dependent on the limits set forth on the policy at the time of purchase.

Benefit of Permanent Disability Insurance
The real reason most people would choose to carry permanent disability insurance would be to maintain an income in the event that they become totally disabled and unable to bring home a paycheck. The main benefit of this type of insurance is that the amount set forth on the policy can be for a much greater amount than what could be obtained on short term disability. Although the premiums would be higher to reflect the greater amount, it would yield enough to sustain the insured and his/her dependents should the illness or accident render the individual unable to work from that point forward. Because this type of insurance is meant to provide income when the insured is unable to work it is often referred to as ‘Income Replacement Insurance.’

Amount and Duration of Payments
One thing to keep in mind, though, is that permanent disability insurance does not necessarily mean that payments will be made for the rest of your life. The term ‘permanent disability’ refers to the expectation that your disability will prevent you from working permanently. Each insurance provider has different definitions of what permanent disability means and the criteria which must be met before the insured can file. In other words, ‘permanent’ refers to the disability and not to lifelong payments from the insurance company.

Permanent Disability Qualifications & Elimination Period
Most often there is a waiting time before a claim against permanent disability insurance can be filed, and those times may vary from one company to the next. This time between becoming disabled and being able to collect on your policy is called the ‘elimination period.’ Also, each company may have different definitions of what permanent disability is. As a general rule, the legal definition is that if the person loses two of anything, such as either both legs or both eyes, he or she has become permanently disabled. However, there are other standards that are defined by each insurance company that would qualify the person for permanent disability status.

Permanent Disability Insurance and Government SSI
One of the options that consumers have when becoming permanently disabled is to file for Supplemental Security Income from the federal government. This insurance is paid for by income tax and is available to all US citizens who have worked and paid into the tax during their lifetimes. Of course there are other factors involved, but generally speaking, SSI can be filed should the person become totally disabled. Unfortunately, SSI is extremely difficult to qualify for and the time period before payments are issued can be extremely long. Having permanent disability insurance can provide income while awaiting the decision after having applied for SSI. Many people have waited two years or longer. Once SSI benefits begin, the amount of benefits paid through permanent disability insurance is likely to decrease in most cases.

Whether you have dependents or not, there is always the possibility that some major illness or catastrophic accident will prevent you from bringing home a paycheck. You can often add this coverage to an existing health insurance plan offered by your employer, or you can purchase a private policy independently. Since rates (premiums) vary between insurance companies, the best way to find affordable permanent disability insurance would be to get quotes from several companies and then do a side by side comparison.

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