Private Disability Insurance: What To Know

Chronic illnesses or life-altering injuries may one day result in a serious disability. You may feel unaffected by that statement today, but there is always a chance that you would be in a position to need to make a disability insurance claim. The federal government's disability program might be known to you, but you could also purchase private disability insurance yourself or through your employer. 

Why Purchase Private Insurance?

You might expect federal SSDI payments to replace your salary and allow you to get food, medication and otherwise maintain your home. However, the payments you get could be far lower than expected. Online calculators can give you estimates of what you could receive--and then you may concede you'd need something more than federal payments.

Private disability insurance can sometimes provide you with higher payments than the federal program. In fact, many policies offer increased coverage that adjusts payments because of cost-of-living. However, in some cases, if you're receiving both SSDI and private insurance payouts, your private insurer might reduce their payments by the amount of money you're receiving from SSDI. Check with private insurers about that before paying into a policy.

What are Requirements?

Requirements to meet before you get benefits vary by insurer, but often the threshold is not as high as the federal SSDI requirements. In both cases you'll need to be unable to work and have some injury or illness. For short-term private disability, however, the expectation is that you'll be returning to work some time in the future. 

Do Payments Arrive Quickly?

For short-term private policies, payout can be within a few weeks once you've submitted the proper documents.  Long-term private insurance may take a series of weeks to pay out. For federal SSDI benefits, you'll be waiting longer. Not only must you submit paperwork, but a hearing is also required. This can take months.

Federal SSDI applications are often refused. If yours is, you may need several more weeks to challenge that decision and finally get benefits. This can be upsetting, especially if you're in significant pain or distress and feel concerned about paying bills or meeting basic needs. That's unlikely to happen if you buy private insurance.

Discovering how much private disability insurance could sustain or improve life after you're disabled is worth it. Disability insurance agents can detail specific points where this insurance will benefit you; discussing it now with an employer and family is also wise.