If you're worried about your family's financial future, you've probably already looked into life insurance. But what if you get sick and have to take an extended leave from your business? Going without your income for several months or even years can severely harm your family and business's financial wellbeing. That's where long-term disability insurance can help.
Businesses require commercial insurance to assist in covering the expenses of property damage and liability claims. Without commercial insurance, a company's owners may be forced to pay for costly losses and legal claims out of pocket. Depending on the circumstances, this might be a financially catastrophic scenario for business owners. Therefore, businesses are obligated to obtain specified forms of business insurance in various states.
Is it necessary to get business insurance?
"Is business insurance required?" you might wonder as a business owner. No, is the quick response. There are several types of company insurance policies available. They are accessible to business owners in the case of a severe natural disaster or when confronted with a claim or lawsuit brought against the company or its personnel.
In practically every state, a specific level of insurance, such as workers' compensation insurance, is required for employees working under your company. Theft lost income from injured personnel, and other dangers are covered by a company insurance policy. If your company does not have business insurance coverage, you may have to pay for it yourself. If you don't have the necessary funds, this might destroy your firm.
Most states require you to obtain worker's compensation and unemployment insurance if you have employees. Disability insurance may be required depending on the location of your business. Business insurance is a product that allows business owners to protect themselves and their assets in a disaster.
What is Long Term Disability Insurance?
Sometimes referred to as "income protection," long-term disability insurance provides you with coverage if you become seriously sick or injured and can't work for an extended period of time. It provides a monthly payout until you can get back to work. If you become permanently disabled, your long-term disability insurance may continue paying you benefits until retirement age or beyond. Unlike traditional life insurance payouts, which happen after you pass away, disability insurance is a living benefit that covers you during your prime working years.
How Does Long-Term Disability Insurance Work?
When you purchase long-term disability insurance, it's essential to read through the contract carefully. These are the main points to look out for:
What's covered?
The insurer will specify what they consider a disability and the situations that qualify for a benefit payment. We'll talk about this in more detail later in the article.
How long is the waiting period?
Most long-term disability insurance policies have a waiting period of around three months. This means that you'll need to rely on your savings for the first three months. After that, if you're still sick, the insurance benefit will kick in.
What is the benefit amount?
The benefit amount tells you how much the insurer will pay you, how often (usually monthly), and whether it will be indexed to inflation.
What is the benefit period?
Some insurers will cover you for as long as you're sick, while others will only pay you for a limited time. We discuss this in more detail below.
Who Can Get Covered?
If you're employed by a business or run your own business, you can get coverage for long-term disability insurance through an employer group policy. However, you may want to get additional personal disability insurance even if you're covered through work.
Either way, you'll only be covered if you're actively employed on the date you get sick and if the illness forces you to cut down your hours or stop working altogether.
You also need to be up to date with your premiums, or your policy may be void.
How Long Does It Provide Coverage For?
When shopping for long-term disability coverage, you'll likely see benefit terms of 2, 5, or 10 years. If you have a benefit term of 2 years, for example, the insurer will pay you monthly for up to 2 years. If you're sick longer than this, you'll need to find another source of income.
Some insurers offer coverage until age 65 or 67. This means that they will pay your benefit monthly until your 65th or 67th birthday.
What Does It Cover?
When you become ill or injured, you won't always stop working altogether. You may be able to work part-time or in a different role. Some insurers will pay you a partial benefit on your long-term disability insurance in either of these situations. Others will only pay if you can't work anywhere at all.
For example, an accountant who injures their arm and may not be able to type on the computer, but might still be able to partially work, though it might mean taking a pay cut. Some insurers will pay a partial benefit to cover the lost income.
Another example is having to cut down your working hours from full-time to part-time due to your illness. Some insurers will pay you a partial benefit to cover the income you lose due to working part-time.
When you purchase your long-term disability insurance, the policy document will specify how sick you must be to receive a benefit and whether partial benefits are payable. It will also identify if any illnesses or injuries are excluded, for example, self-harm.
The Bottom Line
Long-term disability insurance offers you peace of mind during a health crisis. It helps you avoid financial stress so that you can focus on the important things; getting well and getting back to work. Speaking with a professional life insurance advisor can help you find the right coverage for your needs. When you're in excellent health, running a small business is challenging. Given how reliant your innovation is on you, it only makes sense to safeguard it – and your family – from the consequences of your incapacity to work while establishing insurance policies.
Guest Post by Gregory Rozdeba www.dundaslife.com
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