What to Do Now to Prepare for a Smooth Maternity Leave

Mother with her newborn baby.

Has the latest mommy blog replaced the Wall Street Journal as your go-to online reading? Congratulations! There’s no more exciting time than when you’re expecting a baby. But, along with the anticipation comes some worry — about your baby’s health of course, but also smaller things, like will you ever learn how that car seat works (yes); will you ever get a shower again (yes); and…how can you prepare for a smooth maternity leave? We can’t really help you with the first two, except to assure you that you’ll be fine, but here are some pointers to help with the third.

Check on your insurance coverage.

Now’s the time to find out exactly what your benefits are, from confirming what hospitals and services are covered to making sure baby is added to your policy.

Check your company’s maternity leave policy to see what coverage you have, which could fall under paid or unpaid family leave or short-term disability coverage. Yes, believe it or not, pregnancy is included as a disability — in fact, it’s the No. 1 cause of short-term disability claims.

Short-term plans typically cover you from the date your physician tells you to stop working before delivery (this can vary based on your particular situation) until six to eight weeks after delivery, depending on plan specifics. And there usually will be a short “elimination period” before benefits are payable. In the event you have pre- or post-partum complications and your doctor determines it’s best for you to be out of work longer, your short-term plan will usually cover the additional time — up to what’s called the “maximum payable period” or MPP for the plan (usually six months, although it can be as short as three months). Anything beyond the MPP would have to be covered by your long-term plan — if you have one.

To get short- or long-term disability coverage through your employer, you may have to sign up for it either when you first become eligible for benefits or during the annual open enrollment period. Keep in mind that you need to sign up for it before you become pregnant. And once you’ve got it, remember that other, unexpected, health events could keep you from working in the future, so it’s to your advantage to maintain continuous coverage (more on that here.)

Line up daycare.

In some areas, it can seem as tricky to get into a top-flight daycare center as to get into the college of your choice. The time to get on the waiting list is the minute you know you need to

Of course, there are numerous childcare options, from nannies to nanny shares to family members, so take the time to talk through the pros and cons and find the one that best suits your familial and financial situation. In addition to giving you peace of mind, having your daycare situation handled presents the solid message to your workplace that you are indeed intending to return. 

Tell your boss before social media.

Even if you’re not “friends” with your boss, social media news travels incredibly fast and your manager might not appreciate finding out your exciting news after your Twitter followers and Facebook friends do. 

Of course you’re going to break the news to family and IRL friends, but offer your boss the courtesy of letting her or him know before you post to the wider world online. Hopefully they will be happy for you, but remember, this might cause your manager some anxiety, too, so don’t be offended if the first reaction isn’t what you’d hoped for. 

Develop a plan.

You might use the first meeting to assure them that you’ve got your leave handled, but press for a separate meeting to go over the details. You’ll want to give them a chance to get over their shock and get some questions ready. 

Create a plan that includes as many details as you can about your planned leave and return, such as important upcoming events like client reviews or sales meetings, along with a preliminary idea of how you see those duties being handled. Naturally you can’t anticipate everything that might arise, but an initial plan will give your manager the added confidence that nothing is going to fall through the cracks. 

Document everything.

When you think about it, a lot of what we do every day is just second nature. Reports go to this client this day. That client prefers invoices in this format. You always give an end-of-week sales update to this person.

As you prep for your leave, look at the cadence of your days, weeks, and even months and figure out what types of details you can leave that will make the break seamless for your clients and your “replacement,” whether that’s one person or several dividing up duties. 

Then develop a “cheat sheet” that shows what dates each day or month certain activities should happen, and include a template, if possible, for agendas, reports, proposals and the like. The more your team knows, the smoother your leave — and your eventual return — will be. 

Don’t commit to too much availability until you know.

You might think you’ll be totally into a Monday morning sales call, until you spend all Sunday night soothing a fussy newborn. Beware of biting off more than you can (or want!) to chew and give the office some very loose guidelines, such as that you’ll check email once a week and respond to anything crucial, or if someone texts you with an urgent manner, you’ll respond as soon as you are able. 

Make sure your email and voicemail messages steer correspondents to other resources to avoid too many questions or issues, and then plan to play it by ear to determine what works best for you and baby. You may find that it’s a nice respite from “Goodnight Moon” to talk marketing, or you might want nothing to do with the office update. 

But above all else, enjoy every minute with your newborn. All too soon you’ll be back at the office and you’ll likely be pleasantly surprised at how little has changed (except you!) 




5 Frequently Asked Questions About Disability Insurance

Woman with crutches sitting on a sofaDisability insurance provides critical financial protection to American workers. Yet it’s a highly misunderstood form of insurance. You probably have health insurance, home or renter’s insurance, and car insurance. But what about your need for income protection insurance?

Disability insurance pays you a portion of your income when an injury or illness takes you out of work for an extended period of time. It’s a critical form of insurance for most working Americans — because it means if you have to miss work for weeks or months at a time, you will have a financial safety net in place to help cover the bills.

Here are six frequently asked questions about disability insurance:

1. Do I really need it?

Most people hear the word “disability” and assume this form of insurance only applies to very serious injuries and illnesses — yet many common injuries (like fractures) or chronic conditions (like back, hip, or knee problems) can result in your not being able to do your job and earn a paycheck.

According to the U.S. Social Security Administration, more than one in four of today’s 20-year-olds can expect to be out of work for at least a year because of some disabling condition before they reach age 67 (the normal retirement age). Will you have an ability to pay your bills if you need to miss work for several months? If you don’t have access to that much in emergency savings, or friends or family that can help pay your bills when you need to take time off work, disability insurance makes a lot of sense.

2. What’s the difference between short term and long-term disability insurance?

Short-term disability (STD) insurance plans generally protect your income for up to three or more commonly six months. Some plans can run even longer than that. Short-term plans typically cover between 60 and 70 percent of your pay, depending on the policy.

Long-term disability (LTD) insurance protects your income if you need to miss work for longer than three to six months. It usually covers 40 to 70 percent of your income. It costs more than short-term disability insurance because it’s a policy that will protect you for a significantly longer time. The time your coverage pays benefits will range depending on your policy. It can be for a specific period — ranging from two to five or ten years — or until your Social Security retirement age. The waiting period for most LTD policies is three or six months — so you’ll need a plan to cover costs before the payments begin (usually this time is covered by your STD plan or your savings.)

3. Does disability insurance cover all disabilities?

Every plan will have its own definition of disability, so you’ll need to review the definition in your particular policy. In general, many policies do not include the following disabilities:

  • A disability resulting from participation in a riot
  • Injuries which are intentional and a result of self-infliction
  • War or any act of war
  • Any period of disability during incarceration
  • A disability resulting from a crime in which the individual has been convicted
  • Pre-existing conditions (definition varies by policy)
  • For short-term disability: occupational sickness or injury (as this is generally covered by Worker’s Compensation)

4. Can I work part-time and still collect benefits?

Your insurance contract will specify if you can receive benefits while working part-time. Many policies allow you to work, but take the amount you earn and subtract it from your benefit. If your policy has a lifetime benefit cap, working part-time may extend the life of your benefits.

5. How much disability insurance should I get?

Insurance companies typically do not sell disability insurance policies which replace all of your income. But, they do sell policies which can replace up to 70 percent of your income. If your employer does not offer a disability plan with 70 percent coverage, you may want to look for supplemental insurance coverage to offset the difference.

One major benefit of owning your policy: When you pay premiums yourself, you are paying with after-tax dollars. Therefore, any benefits will likely be tax-free. Tax-free benefits paying 70 percent of your income comes close to being 100 percent of your take-home pay. If your employer pays the premiums and the cost is not included in your taxable income, then benefits will likely be subject to taxation.

A good rule of thumb is 70 percent coverage, but, as with all insurance needs, it depends on your circumstances and what you can afford. Regardless, seek out a qualified advisor if you need help crunching the numbers.

Disability insurance is a good idea

Just think how devastating the loss of income would be for you and your dependents. Then think how much worse it would be to lose the ability to earn an income. This is a circumstance you can avoid with proper planning and an action plan.




Five Common Long-term Disability Insurance Myths, Debunked

Five Common Long-term Disability Insurance Myths, Debunked

When you think of long-term disability insurance, what comes to mind?

According to a 2016 LIMRA survey, only one-third of Americans have disability insurance coverage. Considering this, the answer may very well be that you don’t think about long-term disability insurance at all. But for those who do, you may have a lot of negative thoughts swirling around your head.

There is a lot of misinformation out there regarding long-term disability insurance. We’re here to set the record straight on five of the most common myths. And check out how we took down three other long-term disability misconceptions here.

“I don’t need long-term disability insurance coverage.”

One of the most common myths about long-term disability insurance is it’s not needed at all. You might be thinking you get enough protection elsewhere, but most need a stand-alone long-term disability insurance policy to ensure adequate coverage.

  • It’s different than workers compensation. Some people think they can rely on workers comp to cover expenses if they become disabled. It’s a nice safety net to have, but it’s not enough. Around five percent of accidents or illnesses are workplace-related, which means workers comp won’t even cover them. It’s best to build your own safety net with a comprehensive long-term disability insurance policy which doesn’t rely on a benefit your employer might not offer.
  • It’s different than Social Security Disability Insurance. Another common replacement for long-term disability insurance is Social Security Disability Insurance (SSDI). SSDI is a government program which provides a monthly stipend based on past earnings to people under age 65, who are disabled. While this sounds exactly like something you want your disability insurance to do, it can be hard to qualify for SSDI as you typically need to be completely disabled to qualify. You can collect from both your private long-term disability policy and SSDI, and with a Social Benefits Offset Rider, you can reduce your private policy by the amount you receive from SSDI, lowering the amount you pay.
  • Your employer’s disability coverage isn’t good enough. We’ve said it before and we’ll say it again, your employer-sponsored insurance coverage isn’t enough. You could end up taking home only 40 percent of your income through a group plan.
  • You shouldn’t bank on not becoming disabled. It’s easy to think you don’t need long-term disability insurance simply because you won’t be disabled during the course of your career. One in four people in their 20s will become disabled before they retire.

“I’m a government employee; I can’t get long-term disability insurance.”

Many government employees are enrolled in retirement plans like the Federal Employees Retirement System (FERS). FERS enrollees can apply for disability retirement as long as they meet certain qualifications.

If you participate in these programs, insurance carriers are limited in how much coverage they can offer. Generally, insurance companies such as Guardian consider government employees as having 40-60 percent of group plans. So while you can buy private supplemental long-term disability insurance in addition to having FERS benefits, you may not get as much coverage as you expected.

The insurer won’t pay my claim!”

A major concern with insurance in general is you’ll put all this money into building your safety net, and when the time comes to actually use it the insurer won’t pay out. There are a few things in particular about long-term disability insurance which make people wary.

First, it can be hard to get disability coverage for illnesses such as depression and bipolar disorder. Some people use this as evidence that insurers won’t pay out, but it’s a specific case which can be combated by medical records and proper documentation of treatment.

Most of the time, claims are cut and dried: You lose your eyesight or get cancer, you can’t work, and you receive disability payments. The horror stories of denied claims are complicated fringe cases, mostly revolving around mental illness.

Complications can also arise depending on the type of coverage you have. If you have an Own- Occupation Policy, you can receive disability benefits in the event you’re unable to work in your own occupation. With an Any-Occupation Policy, you’ll only receive benefits if you can’t work any other job. This is obviously a lot broader, and it’s the definition many group plans use. People who have these types of policies, but don’t really understand them may accuse the insurer of not paying in certain instances, even though that’s not what is outlined in the policy itself. They can work other jobs, so they don’t qualify for a claim.

Finally, people often fall prey to negative reviews they read online. Take those reviews with a grain of salt, as they represent a small subset of long-term disability policy owners. You might see a handful of negative reviews for example, The Standard, but the company insures around 10 million people. Negative reviews aren’t necessarily representative of a company’s overall service standard. Sadly, people aren’t super enthusiastic when it comes to insurance, and they rarely leave glowing reviews such as, “Bought a policy, it worked like it should, thanks.”

That’s not to say you won’t ever run into a particularly thorny situation, but you shouldn’t avoid long-term disability insurance just because you think you won’t get what’s due. In nearly every situation, you will.

“I need long-term disability coverage until I retire.”

When you purchase a long-term disability policy, you’ll need to choose how long your benefit period is – that is, how long you’ll be receiving those benefits. Typical long-term disability benefit periods are two, five, or ten years, or until retirement.

Receiving benefits until you reach retirement age sounds great, right? You might think this is the best option, but in many cases it adds unnecessary expense.

In general, the longer the benefit period, the more expensive the long-term disability policy. This, combined with the fact that most disabilities only last three years, means a policy with a benefit period which pays until retirement can be unnecessarily expensive. A five-year policy will cover most cases, and can save you a lot of money in the long run.

“I must buy a non-cancelable policy so my rates don’t increase.”

You don’t want your long-term disability insurance policy to ever be canceled. Confusingly, “non-cancelable” doesn’t really have anything to do with this.

Instead, a non-cancelable policy means your rate is guaranteed and won’t increase over the life of the policy.

This is a nice feature to have, and many carriers offer it standard on their policies. If your policy doesn’t have this feature, don’t panic. It may not be worth paying extra to get.

That’s because the risk of a rate change on your policy is very low. Rate changes must be filed through the state in which it’s occurring, and there are strict regulatory processes to protect consumers against arbitrary rate hikes. Going back to The Standard again, they’ve never raised policyholder rates, and they’ve been around since 1906. That’s how slim the chances are of having your rates changed mid-policy.

You may not have long-term disability insurance yet, and if you don’t, don’t let any of these misconceptions scare you away. Get a free quote and talk to our experts to find out exactly how long-term disability insurance can work for you.

This article originally ran on Policy Genius.




Have A Disability? TPD May Forgive Your Student Loan Debt

Have A Disability? TPD May Forgive Your Student Loan Debt

The recent presidential debates had focused some of the public’s attention on the issue of student loan debt burdens. There had been mentions and even promises of measures that would curb the mountain of student loan debt faced by many in the country, especially the Millennial generation. You may have noted there was no mention of the predicament student loan borrowers who have disabilities face. The purpose of this content is to address this omission, and inform the reader of the Total and Permanent Disability (TPD) Discharge.

Eligibility Criteria for the TPD Discharge

Total and Permanent Disability Discharge, or TPD, is a saving grace if you are struggling to pay off your federal student loans, and you have a long-term disability that restricts your ability to work.

With the help of TPD, you’ll be relieved from repaying your federal student loan debt.

To prove your eligibility you can take one of the following steps:

  • If you are a veteran, submit documentation from the S. Department of Veterans Affairs (VA) that demonstrates that you are not unemployable because of a service-related disability.
  • If you receive Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits, submit the Social Security Administration (SSA) notice of award.
  • Submit a doctor’s certificate that states you cannot engage in substantial gainful activity due to a medically validated physical or mental impairment that:
    • Can result in death,
    • Has continued constantly for a period of not less than 60 months, or
    • Can last continually for a period of no less than 60 months.

Easier and Fairer

In order to make payments for higher education easier and fairer for millions of Americans, President Obama’s Student Aid Bill of Rights details measures that allows loan forgiveness for borrowers who have a total and permanent disability.

According to the estimates, $7.7 billion student loan debt will be canceled.

How to Apply for Student Loan Disability Discharge

If you think you’re eligible for student loan disability discharge and haven’t received a letter from the U.S. Department of Education, contact Nelnet immediately. Or, you can phone them at 888.303.7818, send an email to them DisabilityInformation@Nelnet.net, or fill out an application.

The Drawback to TPD Discharge

Don’t think that your problems have come to an end after you have applied for student loan forgiveness through TPD discharge. Why? The forgiven student loan debt is taxable income.

If you want to avoid the hefty tax bill, consider choosing an income-driven repayment plan. It could help you to avert tax obligations for a couple of decades. So, whatever student loan forgiveness options you choose, you won’t get tax relief.

If you face any tax problems related to student loan debt, talk to a tax professional and find out a solution.

The TPD Discharge is applicable for people with federal student loans. If you have private student loans, you may not get a complete student loan discharge. In this case, you must talk to your lender regarding forgiving your student loan.

TPD and 2017

The 2017 Budget proposal attempts to exclude TPD discharges from taxable income. But unless Congress acts, the discharged loans will remain subject to taxation (individual circumstances permitting).




Reduce Your Risk of Developing Mental Illness

Reduce Your Risk of Developing Mental Illness

You can readily name ways to reduce the risk of heart disease, but can you name any ways to reduce the risk of mental illness?

Even though our understanding and acceptance of mental illness continues to grow, we tend to make little  effort to improve our own mental health. We regularly disregard emotional signs that alert us to something amiss.

Emotionally healthy people have the capability to handle life’s stresses, build relationships, and handle disappointments. Just as heart health takes work, so does emotional and mental health.

Six Ways To Reduce Your Risk of Mental Illness

Go Outside

If you don’t get outside enough, it can affect your mental health.

According to research, walking in nature for 90 minutes decreases activity in the part of the brain which is active when you think negative thoughts. Walking along a busy road for 90 minutes, did not decrease activity in this part of the brain. Nature is soothing and decreases stress. Cars speeding past you has the opposite effect.

Numerous studies have pointed to the health benefits of spending time outdoors, two which include:

  • A 2010 study found a boost in self-esteem after just five minutes in a green space.
  • A 2001 study found improved ADHD symptoms in children who spent time in green space.

Connect with Those Who Care for You

Having a group of supportive people to lean on and talk to improves mental health. We are naturally social animals, so we have a deep-seated emotional requirement for human relationships and connections to others.

Face-to-face interaction with friends and family calms the nervous system and reduces stress.

Embrace Yourself

Here is an obvious fact: Each one of us is different. It is much better for your mental health to embrace your differences and feel good about yourself. Be proud that you are unique.

Being true to yourself boosts your self-esteem. And having good self-esteem is vital when coping with life’s challenges.

If you need to change parts of yourself, do so, but don’t beat yourself up because of it.

Eat Well

Food can affect your mental health. To keep your brain healthy and working properly, it needs the right nutrients. A balanced diet (for your body and your brain) includes:

  • A plentiful selection of assorted fruit and vegetables
  • Dairy
  • Whole grains
  • Oily fish
  • Nuts and seeds
  • Water and more water

Do your best to limit alcohol, caffeine, and sugary drinks.

Exercise 

You knew exercise would be on this list. When you exercise, your body releases stress-relieving and mood-enhancing endorphins. These endorphins combat depression, stress, and anxiety.

You don’t need to run a marathon. Simply set a goal to get 30 minutes of daily exercise.  If you exercise outdoors, you benefit from green space and you absorb sunlight, which stimulates the production of vitamin D,  increasing your serotonin levels. This helps you sleep better and keeps your body functioning at an optimal level.

Talk to Yourself in a Positive Manner  

Research studies show that what you think of yourself can have an effect on how you feel about yourself. When we think of ourselves in a negative light, we also tend to view experiences with negativity.

Positive self-talk is one of the best ways to crowd out negative self-talk. Positive self-talk shapes our thinking just as much as negative self-talk does. Positivity reshapes our opinions of ourselves and our circumstances, which in turn enhances our mood and sense of well-being. Be positive and smile more.  It makes a world of difference.

When Should You Seek Help

If you’ve tried to improve your mental health without success, then you may want to seek professional help. Objective assessment from a mental health professional can diagnose a mental illness and provide a roadmap to greater mental health.

If you have any of the following behaviors, professional help may be beneficial:

  • Uncontrollable negativity or fear
  • Concentration problems
  • Feeling hopeless most of the time
  • Coping by using nicotine, food, drugs, or alcohol
  • Suicidal thoughts
  • Inability to sleep



The Effects of Chronic Stress on the Body

The Effects of Chronic Stress on the Body

We can all agree that excessive, chronic stress is bad for you. When we think of friends or loved ones who deal with chronic stress, we worry they may someday suffer a heart attack. But beyond the ways that chronic stress affects the cardiovascular system, how does stress affect other bodily systems? The pervasive and damaging effects of chronic stress on the entirety of the body may surprise you.

Six Bodily Systems’ Responses to Chronic Stress

Musculoskeletal System

When you are under stress, your muscles reflexively tense. This is the body entering its fight or flight response.

Chronic stress essentially keeps your  musculature system in a constant state of agitation. When muscles are chronically tense, you have a greater chance of experiencing a disorder. Tension headaches and migraines are often associated with shoulder, neck, and head muscle tension.

Chronic muscle tension promotes chronic, stress-related musculoskeletal conditions, which can include shoulder, lower-back, upper back, hand/wrist pain, neck, and elbow/forearm pain.

Respiratory System

You tend to breathe deeper when under stress. For most, this does not have a damaging effect. However, for people who have asthma or a lung disease such as COPD, deeper breathing can cause problems.

The onset of extreme stress may cause an asthma attack. And stress-related rapid breathing can turn into hyperventilation, or a panic attack.

Digestive System

Your liver manufactures extra blood sugar for a burst of energy when you are under stress. If you have chronic stress, your body may not reabsorb those elevated levels of blood sugar. This may increase your chance of developing  type 2 diabetes.

Stress releases hormones, generates rapid breathing, and increases your heart rate. All of these symptoms can affect your digestive system through heartburn or acid reflux. Stress can also create a flare-up of existing ulcers. And of course stress affects food movement, which may lead to constipation or diarrhea.

Immune System

Short-term stress kick-starts the immune system, which helps you battle infection and heal wounds quickly. However, continual release of cortisol into your bloodstream during chronic stress compromises your immune system. Therefore, those suffering from chronic stress are more likely to catch viral illnesses such as the common cold or flu. Also, excess cortisol release can increase recovery time.

Female Reproductive System

Menstruation

High levels of stress may play a role in irregular, absent, or painful menstrual cycles.

Premenstrual Syndrome

Stress can make the symptoms of premenstrual syndrome—cramping, bloating, mood swings—worse.

Menopause

Hormone levels fluctuate during menopause. Adding stress to these already fluctuating hormones can increase the intensity of menopause symptoms.

Sexual Desire

If stress is added to the already highly-demanding lives of women, reduced sexual desire may occur.

Male Reproductive System

The nervous system affects the male reproductive system. The parasympathetic portion of the nervous system causes relaxation. The sympathetic portion causes arousal. In males, the autonomic nervous system produces testosterone and stimulates the sympathetic nervous system, which generates arousal.

Stress releases cortisol. Cortisol regulates blood pressure and the normal functioning of male reproduction. Excess cortisol can interfere with the normal functioning of the male reproductive system.

Chronic stress can affect testosterone production and sperm production. Stress may even cause erectile dysfunction or impotence.

Good Stress, Bad Stress

The human body is designed to handle the effects of stress. Stress is not, in and of itself, a bad thing. There are some positive effects of stress, like the heightened alertness that comes with life changes. Stress becomes “bad stress”, or distress, when there is no relief and tension builds. The good news is you can minimize the effects of bad stress through physical and mental exercise.




Your Disability Insurance Options

Your Disability Insurance Options

You’ve recently learned some troubling statistics, namely:

  • One in four of today’s 20-year-olds will become disabled before reaching age 67.
  • The average individual disability claim lasts nearly 32 months.
  • Nearly one-third of respondents to a 2015 survey indicated they would not be able to cover three months of living expenses (even by borrowing) if a financial disruption occurred.

And now you’ve decided to protect yourself and your family. You want the peace of mind that comes with income replacement. What disability insurance sources do you have?

Sources for Disability Insurance

Most people who have disability insurance get it through their employer. But as we shall see, there are several other sources of disability insurance.

A word of warning, it may be somewhat counterproductive to have certain combinations of disability insurance. One source’s benefits may reduce the chance you have to receive benefits from another.

As a general rule, if you add up all your disability payments, they will not exceed 80 percent of your average lifetime earnings (NOT your current earnings) before the disability.

Also, disability benefits from an individually purchased policy are usually not taxed. Benefits from an employer policy are often purchased with pre-tax dollars, which means the benefits will be considered taxable income.

Disability Insurance Options 

Workers’ Compensation Insurance

If someone suffers a disabling illness or injury related to work, workers’ compensation insurance may provide a portion of salary. Normally, workers’ comp pays around two-thirds of your pre-disability income. Important note: 73 percent of long-term disabilities are non-work related, which disqualifies income replacement via workers’ compensation.

State Disability Insurance Programs

New Jersey, Hawaii, New York, California, Rhode Island, and Puerto Rico all provide short-term disability coverage. For people in these states, this is a valuable source of income replacement which can last up to six months.

Social Security 

The Social Security Administration (SSA) administers disability benefits. SSA disability eligibility is determined by the inability to perform ANY gainful employment (as opposed to the inability to perform the specific job at the time of the disability). Social Security disability is federally taxed as income.

Employer Sponsored Disability Insurance

Employers, especially larger ones, may offer short-term and/or long-term group disability insurance. One of the greatest features of employer-sponsored coverage is all employees automatically qualify. However, if you have a pre-existing condition when you start a new job, there may be a waiting period of 12 months. This type of coverage may come with a benefit of increasing your coverage, but be advised that additional coverage can come with the price of answering some questions about your health. 

Individual Disability Insurance

An individual disability insurance policy is one you personally purchase. It offers the most flexibility of all the disability insurance we have listed. An individual policy travels with you, regardless of career or job change. Most individual plans replace between 40 percent and 65 percent of gross salary. These benefits are income tax free.

Take a Long Hard Look at These Opportunities

You have health insurance, car insurance, renter’s insurance, and perhaps other types of insurance. So you may be well-covered for the hospital tending to your disability, but where will you get the money to live on once you leave the hospital? Disability insurance protects your income. Without it, you could easily burn through your savings and put those who depend on you in jeopardy. Before this happens, investigate these options and gain a sense of responsibility and peace of mind.




Long-term Disability Insurance or Long Term Care Insurance: Which is Best for You?

Long-term Disability Insurance or Long Term Care Insurance: Which is Best for You?

 

It’s easy to confuse long-term disability insurance with long-term care insurance. But who can blame you? These types of insurance sound much like synonyms or the work of a practical joker with a PhD in linguistics. Nonetheless, these two insurance plans serve very different purposes in helping you manage financial risks.

 Long-term Disability Insurance 

Long-term disability insurance is an insurance policy that protects employees from a loss of income if they were unable to work due to illness, injury, or accident for a “long-term.”  Long-term disability insurance provides policyholders with a pre-determined percentage of their income depending on the specifics of the policy.

How important is it to protect your income? Ninety percent of wage earners rated their ability to earn an income as “valuable” or “very valuable” in helping them achieve long-term financial security.

These wage earners further believe their ability to earn an income is more valuable than retirement savings, medical insurance, personal possessions, or their homes.

Many people have health insurance that will pay for surgery, accidents, or heart attack care. But how many people consider insuring themselves against the lost wages that go along with these unfortunate health incidents?

Now before you make an excuse for why you will not consider purchasing long-term disability insurance, check out this blog to see if your excuse is a top excuse.

Long-term Care Insurance

Long-term care can be defined as hands-on assistance for those who can’t take care of themselves for an extended period of time due to a prolonged disability, illness, or cognitive impairment.

A person qualifies for long-term care when he or she cannot independently perform at least two activities of daily living (ADLs), such as grooming and eating.

Long-term care insurance policies provide a daily amount (determined by one’s policy) to policyholders for services to assist them with ADLs.

Have an excuse? Is it an excuse so many others have?

So Which Policy is Best for You?

Here are some considerations when deciding which policy to choose.

Long-term disability insurance is vital if you are the main income source for your family. You have to ask yourself if you and your family could afford the necessities of life if your income was temporarily or permanently lost.

Age is also a very important variable: Imagine if you became permanently disabled at 32. You would be out of 33 years of income (if you had planned on retiring at the age of 65).

Age is a huge factor for another reason when you are considering the purchase of long-term care insurance. Make sure you start to look into policies while you are still young. If you purchase when you are young, you can save on premiums, and more likely get approved.

Bottom Line

  • Consider purchasing both policies when you’re healthy and young.
  • Both provide important coverage in a time of need.
  • Both protect your assets.

If you must choose one over the other, here’s a quick rule of thumb. During your working years insure your income with long-term disability insurance. Long-term care insurance becomes more important as you move towards retirement.

But nothing beats the protection that comes with both types of insurance.

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Time to Debunk These Persistent Disability Insurance Myths

Time to Debunk These Persistent Disability Insurance Myths

When you think of disability insurance, do you think about insurance that covers disability due to a relatively severe accident? Many people do. What about the chance of a disability happening to you? You are a careful person and you have a desk job. No need for disability insurance, right? Well, the preceding scenarios make up two of the larger disability insurance myths. Read on to see how many disability insurance myths you believe.

Myth: I won’t ever need it

You, disabled? You are as strong and healthy as an ox. So the chances of a disability must be pretty slim, right?

Actually they are likely higher than you might guess.

Just over one in four of today’s 20 year-olds encounter a disabled before they retire.

Are you prepared if it happens to you? Probably not. Most Americans don’t have disability insurance, nor enough emergency savings to last the duration of the average long-term disability claim, which is 34.6 months. Ouch. Don’t fall prey to this disability insurance myth.

Myth: Catastrophic, one-time events, such as serious accidents or injuries create most disabilities

Illnesses rather than accidents cause approximately 90 percent of disabilities.

Common chronic conditions are the top causes of disability, including:

  • Back problems
  • Joint pain
  • Muscle pain
  • Muscle and bone disorders

Myth: Disability insurance is the same as worker’s compensation

When you are injured at work, you receive workers’ compensation benefits. Most state laws require employers to carry workers’ compensation to cover injured employees.

One does not have to be injured on the job or worksite to receive Individual disability coverage benefits.

Myth: Disability is not taxed

There are several types of disability insurance that are non-taxable, but there is no inclusive exemption for disability.

Disability benefits paid by an insurance company for lost wages, loss of limb, loss of sight (etc.) may or may not be taxable, depending on the circumstances, such as if:

  • The premiums were paid by your employer and were not included in your taxable income, the disability benefit income is taxable.
  • You paid the premiums out of your own pocket or with payroll deductions from after-tax income, the disability benefit is generally not taxable.
  • You and your employer jointly paid premiums and you paid your share with after-tax income, only the amount covered by your employer’s payments is taxable.

Myth: Social security covers my disability

Social Security provides small benefits to disabled workers ($1,166 in June of 2016) and getting approval for coverage is very difficult.

Only 32 percent of workers who applied for social security disability benefits in 2015 were approved; the lowest ratio since 1982.

Also, you can’t collect Social Security disability benefits until the end of your fifth full month of disability–and only if you are expected to be out of work for 12 months or longer.

Reality: Disability insurance is income protection

Disability insurance is not a luxury. In today’s day and age, it is a requirement for most working adults—a majority of whom must find a way to protect your greatest financial asset—your ability to earn a paycheck.

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What are Disability Insurance Riders and Which Are Most Common?

What are Disability Insurance Riders and Which Are Most Common?

Just like cars have a standard model, disability insurance has a base policy. Just like cars have options that can be added to the standard model, so does disability insurance. Optional “add-ons” to the base policy of disability insurance are called disability insurance riders. Riders allow consumers to individualize—to add optional features—to their base policy, which address their specific income protection needs.

It is important to note that unlike standard car models that are normally consistent across dealerships, the coverage included in base disability policies, differ from provider to provider. That being said, when we discuss popular disability insurance riders, we are assuming that these riders are not considered part of the base policy by most providers.

Most Common Disability Insurance Riders

the following disability insurance riders are among the most popular: Residual Disability Benefit, Cost of Living Adjustment (COLA), Future Increase Option (FIO), Automatic Benefit Enhancement (ABE), and “Own Occupation” Total Disability.

Residual Disability Benefit

In order to receive base disability benefits, the policyholder has to demonstrate the inability to work. The benefit may be suspended once work is resumed. A residual benefit allows the policyholder to receive some of the disability benefit once work resumes, even part-time work.

The residual disability benefit is proportionate to the earning power you’ve lost, regardless of how many hours you work. As an example, if you suffer a 40% loss of pre-disability income, you’ll receive 40% of your total base disability benefit for as long as you are disabled (up to the end of the policy’s benefit period.)

Residual benefits apply to temporary disabilities.

Cost of Living Adjustment (COLA)

Inflation erodes buying power. This problem is even greater for people with disabilities because they cannot increase their income to compensate. A disability insurance solution to this problem of inflation lies in COLAs.

A COLA rider adjusts the amount of monthly disability benefits received by the insured each year during their disability. The adjustment that is made in the monthly benefit depends upon the way the rider is designed.

Future Increase Option (FIO)

As your career progresses, your income is most likely going to increase with your experience. Disability insurance replaces a percentage of your current income if you become sick or injured, but what about your future income?

That’s where a future purchase option rider is helpful. It allows the insured to increase disability income protection without the normally required medical exam to show medical insurability.

Automatic Benefit Enhancement (ABE)

This is one of the most convenient disability insurance riders. It helps keep your disability insurance benefit aligned with standard annual income increases, which one might experience when healthy. It is applied to eligible policies and provides an annual benefit increase each year for five to six years.

Your premium will also increase each year as a result of the increased benefit. Annual benefit enhancements occur automatically, but you can easily opt-out in any year.

“Own Occupation” Total Disability

Own occupation disability insurance riders mean that a disability is determined by your inability to perform the duties of your specific occupation or profession.

By contrast, “any occupation” disability coverage does not consider you disabled if you are capable of performing the duties of any occupation for which you are reasonably suited. In other words, if you purchase “any occupation” coverage, you may not receive any cash benefits from another occupation even though you can perform the duties of another job, but cannot physically tolerate the rigors of your specific occupation, e.g. doctor, lawyer, teacher.

Choose the Riders that are Best for Your Circumstances

These are some of the more common disability insurance riders. Different insurance providers offer variations of the above riders and have different ways to apply them. Many are available only at the policy’s initial issuance, others may be added on later.

Make sure to do your homework, read the small print, and ask numerous questions to your insurance provider.

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