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How does disability insurance work?



No matter how careful you are, things happen. The Social Insurance Agency estimates that more than a quarter of today's 20-year-olds will not be able to work due to disability for a year or more before they retire. This is what disability income insurance is for. If you are ill or injured and unable to work, disability insurance will help replace some of your lost income while you get back on your feet.

Disability insurance can be divided into two main types: short-term and long-term. They work in a similar way, but last for different amounts of time. The type of disability you should choose depends on your situation and you may think it makes sense to have both short and long-term disability insurance.

Types of Disability Insurance

Short-term disability insurance

such as Haven Disability, protects you in the short term if you suffer from a disability and need time to recover. The amount you receive each month from a short-term disability insurance plan is usually based on a percentage of your salary (usually between 40-60% of your income).

Short-term disability insurance benefits can start as little as two weeks and last for up to a year. Think of the hairdresser who throws his back and can not stand for long. Or the accountant who has had complications from COVID-1

9 and is bedridden for weeks or months.

Long-term invalidity insurance

Long-term invalidity benefits gain momentum where short-term invalidity benefits end. It is designed to protect you from an illness or injury that may prevent you from working for several years or more. Think of the employee who works in a call center and can no longer write due to severe arthritis. Or the programmer who has suffered a traumatic brain injury. The truck driver with impaired vision. Long-term disability insurance is sometimes offered by employers, but it is more often purchased by individuals.

What does disability insurance cover?

The exact list of illnesses and injuries covered may vary depending on the insurer and the options you choose, but in general, disability insurance covers illnesses and injuries that prevent you from performing the important tasks at your job. It includes infectious diseases such as COVID, conditions such as cancer or complications from pregnancy and injuries such as a broken bone.

With Haven Disability, a disability occurs when …

  • You have a condition caused by illness or injury that prevents you from performing the important tasks, functions and operations that are usually required for your profession that cannot reasonably be omitted or modified
  • You are under the care of a doctor
  • The disability begins while the policy is in force

We consider that you are a profession as your regular profession or company at the beginning of a disability for which you receive or can receive compensation. (Sorry for the legislation. It's an important term, so we need to be extra specific.)

What injuries and illnesses are not covered by disability insurance?

With Haven Disability includes conditions that are not usually covered:

  • Normal pregnancy and childbirth
  • Substance abuse
  • Most cosmetic surgery
  • Self-made injuries

Exactly which conditions are covered or excluded can also vary depending on state. If you have a question about a specific condition or would like to learn more about Haven Disability coverage, please contact our support team via email at disupport@havenlife.com, or call us at 1 (855) 950-1395 weekdays from 8: 30–16.30 Eastern.

Choosing the Right Disability Option for You

When buying a disability insurance policy, you have three main choices to make: benefit, benefit period, and abolition period.

Compensation amount

Your benefit amount, or monthly benefit, determines how much income you receive per month if your disability claim is approved. With Haven Disability, you can choose the amount you want from $ 500 to $ 5,000, with a ceiling of 60% of your income. With short-term disability policies, the amount of work is almost always a percentage of your salary – usually close to 60%.

The higher the benefit amount, the more you pay for coverage, so choosing the right amount can be a balancing act. You should at least consider having enough to pay for your main monthly expenses, such as your rent or mortgage, car payment, food and utilities. This is especially true if you are a single parent or do not have a partner whose income can help cover the expenses.

Benefit Period

The next thing you need to decide is your benefit period, or how long you & # 39; I get benefits if you can not work. The longer the benefit period, the higher the cost. For short-term disability policies, the benefit period usually extends from three months to one year. (Haven Disability offers benefit periods of 3, 6 and 12 months.)

Long-term disability insurance is measured this year, rather than months, with benefit periods of two or five years common. Some policies also include coverage that extends to retirement age. However, expect to pay more for this level of protection.

Abolition period

Now you know how much you get and for how long. The last thing you should choose is how soon you will receive benefits. Of course, you can not claim if you are sick one day. The abolition period, or waiting period, determines how long you need to be disabled before your benefits begin.

With short-term disability policies, the elimination period can be as short as two weeks or as long as a couple of months. (Haven Disability offers the choice between 14, 30 or 60 days.) With long-term disability policies, the elimination period can range from 30 days to two years, with 90 days as a common option.

The more you have saved the longer a rainy day, the longer you can afford to wait for your benefits to begin. Choosing a short elimination period will increase the cost a bit, but it may be worth it if you do not have enough emergency savings to ventilate months without income

Compare individual versus group policies

If you get a short-term disability insurance through your employer , good. Some states, such as New York, California and Rhode Island, even require state employers to offer disability insurance to employees who live and work within state lines. That's a nice advantage. Group disability insurance is usually a little cheaper than individual disability insurance, and in many cases the employer pays in full. But there are some differences between insurance from employers and individual disabilities.

If your employment policy is provided by your employer, the benefits you will receive will be taxable, so you may not have as much coverage as you think. Individual insurance is purchased with income after tax, so the benefits will not be taxed further. This means that 60% of your salary can actually come closer to the compensation for your home salary.

If you leave the organization, the group insurance will probably end with it. You can get coverage at your next job, but maybe not. Individual policies work differently. If you buy your disability policy directly from the operator, you "own" the policy and can take the coverage with you if you change companies.

That portability is especially important if your state of health changes over time in a way that may make it expensive or even impossible to get a new policy. If your individual insurance is "guaranteed renewable", you have the opportunity to renew the coverage for a certain period of time, regardless of your health change. With Haven Disability, you have the opportunity to renew until the age of 65.

How much does disability insurance cost?

As a rule of thumb, disability insurance usually costs between 1-3% of your salary. How much you pay for individual disability insurance depends mainly on the amount of the benefit, the benefit period and the elimination period you choose together with the insurer. Other factors include:

  • Age
  • Gender
  • Occupation
  • Health Conditions

The fastest way to find out how much a short-term insurance will cost is to get an estimate of 30 seconds disability. But if you'd rather see numbers first, our article on how much disability insurance costs will give you a good idea.

How to Apply for Disability Insurance

Group plans offered by employers are usually guaranteed acceptance, so the application process can be as simple as choosing when applying for benefits. If you are buying an individual disability insurance policy, things are a little different because you have to go through an insurance process. However, how time-consuming the process is varies greatly.

Many disability policies require a telephone interview and a trip to the doctor. Others, such as Haven Disability, can be searched completely online in minutes without calls, meetings or fluids. You need to answer some basic questions about your health and the activities that your job requires.

How to File a Disability Insurance Claim

If you are sick or injured and unable to work, you can start a Haven Disability Claim online at any time by logging into your account. To start the claim you need …

  • Personal information (such as your name, date of birth, etc.) and policy number
  • A brief description of the diagnosis or medical condition that is causing your disability
  • The last date you could work normally
  • We may also request additional information, depending on the circumstances of your claim.

Even if invalidity benefits do not start to accumulate until your elimination period has passed, this does not mean that you have to wait to submit your claim. If your illness or injury is likely to keep you out of work for an extended period of time, it is best to file as soon as possible so that we can begin processing your application. determines how much you receive each month if your disability claim is approved. Benefits received from your employer will be taxed, but the purchase of individual coverage with money after tax will not do so. With short-term disability coverage, you can usually choose a benefit period of 3, 6 or 12 months.

  • Your abolition period determines how soon you will receive invalidity benefits if you are unable to work. With short-term policies, you can usually opt for an elimination period of as little as 14 days, although 30 and 60 days are also common options if you want to save on premiums.

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