You might already have several types of insurance policies, including health, life, or a supplemental policy. But are you protected in the event of a long-term or even permanent disability? What would happen if you were unable to work for an extended period of time? How would you protect your income?
An attractive—and affordable—solution is to add a disability rider to your insurance policy. Specifically, to your life insurance. For a small fee, you can significantly expand your coverage and obtain valuable benefits. Read more to find out how you can protect yourself in the event you are unable to work.
Long-Term Disability Riders: Article Contents
What is Long-Term Disability?
Surely you have asked yourself many times what might happen if you were unable to work for an extended period of time due to an illness or accident. What would you do without the income to support your family? How would you cover the expenses from a situation like this? It is a very common concern. According to information from Social Security, an estimated 25% of people who are 20 years old today will deal with some type of disability before they reach retirement age.
These are situations that leave you unable to work temporarily, or even permanently. In these situations, you can’t go to work and do your job because you are physically unable to perform your job due to an illness or accident.
In general, from the insurance company’s point of view, a person is considered to be disabled when they are no longer able to perform a substantial amount of their daily activities. In addition, there is a type of disability in which the disorder is caused by an accident or illness, provided that there were no preexisting conditions for it. These include serious cases, such as when the loss of a limb, organs, or even senses, like vision, as well as symptoms and syndromes, make it so you are unable to carry out your work normally.
There are various types of disability, which are classified by their severity:
- Permanent Disability. Under permanent disabilities, we also find partial disabilities, which occur when a person cannot fully perform their work (full time and with maximum effort for the rest of their life). Also included in permanent disability is definitive or complete disability, which means that the person will never be able to do any type of work ever again.
- Temporary Disability. With temporary disability, the person is unable to fully perform their work, whether they are working part time (partial disability), or not going to their workplace at all (temporary complete disability).
When you suffer one of these types of disability, you lose all or part of your income, either during a certain amount of time or permanently. In order to have a more broad coverage in these types of situations, you can purchase supplemental health insurance, such as accident insurance, critical illness insurance, hospital indemnity insurance, or hospital expense insurance. There is also disability insurance, which can be long or short term.
In addition to all of these types of policies, an interesting option is to purchase a disability policy that complements a more complete product. This is more affordable and has significant advantages.
Disability Riders: Expand Your Protection
It’s common to include riders in insurance policies. They are added to the main policy to broaden and improve your coverages. In general, for a small extra fee, you can obtain significant additional benefits.
For disability riders, it means including a rider in a policy that establishes a type of extra protection in the event that the insured suffers and accident or illness that leaves them unable to work, either temporarily, permanently, partially, or fully.
These riders can complement a disability insurance or life insurance policy. The most attractive feature of disability insurance is that they allow you to design your own coverage and decide under what situations and conditions you will receive the benefit stipulated in the policy. If the rider is added to your life insurance, you can use it to receive an additional benefit or to save for paying premiums.
In both cases, the initial protection offered by the insurance will be expanded to cover income protection for when the insured is no longer able to work, along with significant improvements in the benefits of the insurance.
In both cases, you must keep in mind that the insurance company can deny coverage for some riders in the event that the insured has, for example, a high-risk job or lifestyle. These situations can also cause your premiums to increase.
Lastly, you should remember that not all disability riders are the same, meaning that it is important for you to have a clear understanding of what types there are and how they work. It’s also always a good idea to talk to an expert, who can provide you with all the information you need.
What Type of Disability Riders Can I Choose From?
When purchasing a rider related to a disability, the first thing you need determine is what type of insurance you are adding it to. In general, they are added to life insurance policies and disability insurance policies.
Life Insurance. With life insurance, you can purchase two main types of clauses:
- Premium Rider. This means that if the insured becomes disabled, either permanently or temporarily, they will no longer be required to pay monthly premiums. In other words, as long as you are disabled, the company will cover the cost of the life insurance. For temporary life insurance, this means that the insurance company pays the premiums. For permanent life insurance, it will also cover the cash value contributions.
These clauses, called waiver of premium riders, will enter into effect once you have been disabled for a certain amount of time, sometimes up to six months. After this, they will remain active as long as you remain disabled, or in some cases, up to the age of 60 or 65. For temporary insurance, it will cover your premiums until the policy expires.
- Income Protection Rider. Another common type of clause is an income protection rider, which gives a monthly amount to the insured while they are unable to work. This allows you to replace your lost income. The monthly amount can be a percentage of the face value of the policy, which means this won’t always provide enough money to cover your full monthly salary. Even so, this is an interesting option.
Disability Insurance. When purchasing disability insurance, you can include a variety of riders that will allow you to adapt it to fit your specific needs. This allows you to design and personalize exactly how the insurance will work. The main riders are:
- Own-Occupation Rider: This is one of the most commonly requested riders for people buying disability insurance. It stipulates that the benefit will be collected if the disability hinders you from carrying out the duties you have been trained to perform. For example, a surgeon who suffers an accident that makes them unable to carry out operations, even if the disability allows them to practice another type of medicine.
- Non-Cancelable Rider: This clause guarantees that the premiums will never increase.
- Partial Disability: If you suffer a partial disability where you can still work, but are required to work less hours, this rider give you money to supplement the amount you will no longer be earning.
- Future Purchase Option. These types of clauses allow you to increase your disability coverage in the future without having to undergo medical exams. This is advantageous for people who know that their salary will substantially increase over time because they will need additional coverage to replace their future earnings in the event they become disabled.
As you can see, there are many options, and it’s a good idea to consider all of them because they will allow you to significantly improve the benefits of your life insurance or disability insurance. A disability rider, in any of its forms, can make your policy much more comprehensive in protecting your quality of life.