By definition, you invest in insurance and then hope you never have to use it. This applies to everything from health coverage to accident insurance, but one policy that we often forget about is disability insurance.

Can you afford to live the rest of your life without an income if you get permanently sick or injured? If not, then you need disability coverage.

Finding the right policy is the next part of the process. It’s not only about searching out premiums and reputable insurers. There are a lot of other factors that you must consider as you search for the best coverage for you.

As long as you pay attention to these four factors, you’ll have enough protection to give you peace of mind for your future.

1. Coverage Control

Don’t sign anything yet if you’re searching for disability insurance because your employer is offering it. That cheap premium sounds tempting, but you’re throwing your money away if it’s not the right coverage.

For one thing, according to federal ERISA law, the plan only has to meet minimal standards. Should you need to enforce your policy, you’re limited to the terms your employer chooses.

With an individual policy, you get to decide what your plan covers. For instance, as a physician, you’d want to ensure the capped amount is at least your annual salary. The employer’s plan could be based on an average of the staff budget, much less than your financial needs. That’s why it’s cheap or free, though.

2. Short Term, Long Term, or Both?

The next choice is whether you want short-term or long-term coverage. Each one has its pros and cons, which we’ll lay out here for you.

Short-term insurance is usually cheaper and easier to qualify for. It kicks in soon after an injury or illness is claimed, typically within a week or two. You’ll get your funds sooner, but the average policy coverage ends within three to six months. Some policies cover you for up to two years.

Long-term coverage takes care of you in the event your disability is long-lasting or permanent. 

These policies take longer to kick in because your doctor has to validate that the injury or illness qualifies as a chronic or permanent problem. Once that happens, you can receive a regular income until you’re 65 (or longer).

The wisest financial move is to invest in a short-term and a long-term policy to cover all your bases.

3. Any- or Own-Occupation Disability

There isn’t a major distinction between the words “any” or “own” until you apply them to disability insurance. When you go to file a claim, those two tiny words are the most important ones in your policy.

The words refer to your ability to hold an occupation and therefore qualify for disability coverage. “Any” job means your disability prohibits you from doing some jobs. However, you could do other jobs, even if they’re night and day from what your career was before your injury or illness.

Here’s an example. As a surgeon, an individual diagnosed with Parkinson’s Disease won’t be able to operate. They could still do clerical jobs, such as answering phones or filing paperwork. Under the “any” definition, they don’t qualify as disabled.

The same person with an “own” policy can’t do their original job. They qualify as disabled and receive the benefits they’re entitled to per the terms of the policy.

4.  Exclusions and Riders

Sticking with an employer’s policy limits your coverage in other ways. You’re stuck with the exclusions they agree to, and with disability insurance, that can be a major problem.

Most companies have certain lifestyle exclusions for activities that are considered hazardous. This part is important if you enjoy adventurous hobbies on the list, like frequent flying or rock climbing.

Check the policy for any activities that exclude you from coverage. If your injury comes from an excluded behavior, you won’t get disability benefits. You can add a rider to include specific activities you’d like covered with an individual policy.

Conclusion

Free and cheap insurance policies sound perfect—until you need them. That’s when you realize you get what you pay for, and the coverage from the plan isn’t worth a dime. 

Look for these four coverage components to put together the perfect disability policy for your lifestyle and future.

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