Important terms to know:
Benefit Amount–This is the amount you’ll be paid should you become disabled.
Benefit Period–This will define how long benefits will be paid. It could be 5 years or until age 65. It’s worth the extra premium to be covered to age 65
Definitions of Disability–There are two general types of disability definitions that you should be aware of. Own Occupation–which states that in order to be declared disabled you cannot perform your particular occupation. This is the best option. If you are a singer and can no longer sing, you’re declared disabled and will receive benefit. Any Occupation–this stipulates that you are unable to perform any occupation. If you’re a singer and you can no longer sing but you can earn a living as a stage manger, you will not be declared disabled.
Guaranteed Renewable–This means the insurance company can’t cancel your policy as long as you pay the premium.
Waiting or elimination period–This is the time you have to wait before payments begin. This is akin to a deductible in other types of insurance policies.
Waiting periods may range from 30 to 180 days. A longer waiting period reduces the premium.
(Mortgage and Money Coach Damon Carr is the owner of ACE Financial. Damon can be reached at 412-216-1013.)
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