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Review current coverages to find holesgirl with papers image by starush from Fotolia.com
Decide on a coverage type. Some policies pay for every expense independent of government benefits while others are integrated through Social Security. Policies may have different waiting periods before they provide benefits. Some cover long-term disabilities and others only short-term needs. Review existing coverages and decide if you need the comfort of a long-term policy or to patch holes in existing insurance policies you also might have. - 2
Read your employee handbook to find coverable benefit amounts.Girl with book image by Sergii Shalimov from Fotolia.com
Examine coverage amounts. To prevent disability fraud, policies will only cover a percentage of your W-2 wages. This can often be as much as 70 percent of your wage, plus a similar percentage of pension, 401(k) match, or other employer-provided benefits. Find all of your employer benefits before applying to increase the amount of coverage you're eligible to receive. - 3
Inflation riders can add value to disability policies over the long run.penny bank pig image by Kathy Burns from Fotolia.com
Think about policy permanence. Insurance contracts pay a predetermined amount of money if you become disabled, but what if you don't need any benefits until 10 years after you purchase the policy? Inflation will decrease the value of dollars received unless you buy an inflation rider, which increases the value of coverage over time to match inflation. Also, what if you are promoted or earn a nice raise in the future? Buying a future-purchase option will allow you to purchase more coverage later at current rates. If buying coverage for a long time period, these options might be valuable. But if you're covering short-term needs ,you should avoid both. - 4
Companies that deduct premiums pay for benefits that are taxable.TAX TIME image by brelsbil from Fotolia.com
Decide on tax treatment. If you're self-employed and deduct premium payments, any disability benefits received will be taxable. Many choose to forgo deducting the cost of coverage, which makes benefits tax-free. - 5
Coverage is expensive for jobs requiring lifting and other strenuous work.hardhat worker image by David Sexton from Fotolia.com
Understand pricing. A high-wire trapeze artist will pay more for disability than a computer programmer because policies are priced higher for workers more likely to become injured. Coverages may cover hospital costs, partial injuries or short-term disabilities. These benefits, if accepted, may increase the cost of coverage substantially.
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