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§Most policies may be continued year after year until you retire. But average life of a disability insurance policy is about 5 years.
§The average time required for an insurer to review an application is about 3 weeks. The insurer may request copies of medical and financial records.
§Applications are still submitted on paper; no online enrollment system is available.
§Expect premium cost to be about 2% of your salary if you have a “desk job” and about 4% of your salary if you work with your hands. Of course, this is a very rough guideline, and actual cost will depend on a greater number of individual factors.
§When a policy is issued, you have at least 10 days to review all of details and cancel coverage if you are not completely satisfied. It may be useful to have an independent financial adviser review new policy during this period.
§Assuming that you keep disability insurance for balance of your working career, probability of suffering a loss of income due to accident or illness sufficient to trigger a claim under your policy is about 1 in 4.
§If you become disabled, you should consult with an attorney who specialized in disability insurance claims before filing a claim with insurer. This may help avoid delays and disputes regarding claim.
Tony Novak, MBA, MT, is a financial adviser based in Narberth, Pennsylvania. He is editor/publisher of “Tax and Benefit News” and moderator of the tax forum for financial planners at “Financial Planning Interactive”. He is available by telephone at 1-877-529-7435 to address public inquiries on tax and benefit planning issues free of charge through OnlineAdviser service sponsored by www.MedSave.com and www.FreedomBenefits.com.