How To Set Up Long Term Disability Benefits

None of us expects to become permanently disabled, yet our chances of suffering injury or illness to the point of permanent disability outnumber those us who will die prematurely. Consider what you will do if you are forced to spend many weeks in the hospital battling MRSA—a Methicillin resistant staphylococcus aureus—a superbug. What will happen to your family budget?

Step One: What do you have?

Many of us will answer, my company provides long-term disability, and we’ll be right—and wrong. For that reason, the first step is to examine existing disability policies you have, and if you don’t understand the “fine print,” ask an agent to explain. If you spend 6 months in the hospital, your sick leave lasts 10 days, and you have a 6-month waiting period on your long-term policy, you’ll have no income for more than 5 months. Don’t forget policies on monthly bills, such as the mortgage or the car payment, that pay in the event of illness.

Step Two: How Much?

The next step is to determine how much dollar value you need during any recovery period, and how long a period you need to protect. Deduct any expenses that will cease while you are incapacitated—commuting, meals out, clothing for work—and come to a conclusion about the dollar value of your work. Do not depend on spousal income. A spouse may be injured in the same accident that befalls you.

Step Three: Prepare For Permanent Disability

What if you will never go back to work? You will need to arm yourself for such long-term costs as college for kids, weddings, and so on. Then you need to know how long you will require an income. Many long-term disability policies pay only until Social Security takes over. Will that be satisfactory? Do you want to spend the last twenty or more years of your life living on Social Security? If not, you need to make other plans to fill in the blanks.

What Can You Afford?

Determine how much you can pay for a long-term disability insurance policy. To help with that, go online and look at cost vs. value premiums. There is no point in paying for 5 years and then losing the policy because it costs too much.

When you have the information, speak to your insurance agent. If you are prepared, you won’t walk away with a policy that leaves you high and dry at the most desperate moment.