Do you know what you signed up for?
Jon Glougie CFP®, Investment Advisor, DWM Securities Inc. September 13, 2013
Insurance Advisor, Dundee Insurance Agency Ltd.
If asked if you have adequate disability insurance, how would you respond? Many individuals are convinced that they have adequate coverage under a Group Benefits offered by their employer, but only a few truly do have the coverage they need.
Many employer Group Benefits plan will offer both Short-term and Long-term Disability plans. The Short-term Disability portion is a great benefit to you, as it will offer almost immediate income protection. If you do not have Short-term Disability insurance, an emergency reserve of cash (3 to 6 months worth of salary) is often enough to offer you similar income protection. Long Term Disability, on the other hand, requires further consideration.
A key component of a Long-term Disability policy is the occupation definition. Your occupation definition will determine whether or not you are entitled to your Disability benefit. There are three occupation definitions: Own Occupation, Regular Occupation and Any Occupation. The difference between these three definitions can have a significant impact on your policy.
– Under this definition, an individual will be able to collect their monthly disability benefit as long as they cannot perform the duties of their specific job. Under this definition, the individual can find other employment and still collect their monthly benefit.
– Under this definition, an individual will be able to collect their monthly disability benefit as long as they cannot perform the duties of a job that they have been reasonably educated/trained to do. Under this definition, if you can perform the duties of another job (which you have been reasonably trained for) the benefit may not be paid.
– Under this definition, an individual will be able to collect their monthly disability benefit if, and only if, they cannot work any job. If you can work, regardless of what the job is, you will not qualify for the insurance. You must be totally disabled.
In order to truly insure yourself and your ability to earn an income, you should be very mindful of these aforementioned definitions. If you would like to review your Disability Insurance Policy, please let us know, we’d be happy to help.
*Insurance products provided through Dundee Insurance Agency Ltd.