wealthfactsheet-life_insurance-disability

8. Disability Insurance

Many people disregard the importance of Disability insurance. We however advocate a lot on disability insurance. It is not often the lost of a person due to death that is going to drastically affecting the family financially, but the inability to die that causes more financial strain to a family.

Let's give 2 examples, say a family man in example 1 dies and has life insurance coverage. The family is distraught. But financially they are glad that the family man bought some life insurance so that financially at least the family is well taken care of.

Example 2, another family man suffers from stroke and survives. He did buy some life insurance policy but they are only claimable on death or total and permanent disability. As such he cannot claim. Not only that, his recuperation period is too long, he loses his job because his company cannot support him anymore. They put him on no-pay leave until he recovers. He takes about 4 years to recover and when he finally recovers he found that he has incurred $200,000 of debt because of his disability.

Therefore, Disability insurance is to replace loss of income due to any causes, both natural and accidental. There is no one lump sum but rather it is an insurance on 75%(depending on insurance company) of his income at the time he bought this policy.

Whenever a claim is made on Disability insurance, the insurance company will proceed to pay monthly amounts to the insured. The payment will stop once the insured recovers and insurance company will appoint its very own medical examiner to examine the insured from time to time.

Disability insurance are particularly popular with professionals such as doctors, dentists, surgeons, engineers, pilots, etc. Because of their profession, if a disability strikes, they would want their income to still maintain.