It’s great to be an entrepreneur, right? There are plenty of “upsides” to being your own boss. But there is a downside. If you are sick or disabled, you can’t rely on employee health benefits to carry you through the rough times. How long could you manage without an income if you were unable to work due to sickness or injury? If more than ninety days would be a problem, you have probably already considered purchasing disability insurance.
It’s a smart move. Statistics indicate that at age 30, 5 out of 9 people will be disabled for more than 90 days. At age 50, it’s 1 out of 3.
When you’re shopping for a good policy, take your time and read the fine print. There are significant differences among policies and there are some key issues you should know about before you sign on the dotted line. The following questions to ask are provided by Susan Braverman, a Licensed Disability Consultant from Vancouver, Canada.
1. What is the length of the term? If you have a stroke, for example, are you covered for 36 months or until age 65?
2. How is disability defined? If you can’t work at your stated occupation, are you considered disabled, or do will you be expected to get a job serving hamburgers if you are capable?
3. Is there a Partial Disability Option? Persons suffering from MS or diabetes, for example, are often able to work sporadically or part time.
4. Are the premiums guaranteed? If you start smoking or become high risk for disability in some way, does the company have the right to raise your premiums in the future?
5. Is there a Return of Premium option or some other option that will allow you to recover your payments in 20 years time?
6. Is there a Cost of Living Rider? A monthly income that seems adequate today may be insufficient twenty years from now.
7. If you miss a payment, how much time before your policy is cancelled? Thirty days is reasonable.
8. Is your company the First Payer or is there an Integration Clause? That is, if you are unable to work but have some other income, will your insurance policy deduct your other income from the payments (Integration) or will they pay you the full amount (First Payer).
9. Is your policy portable? If you relocate to another area or country, can your policy go with you?
10. Is there some way you can check to ensure that the company has been solvent for several years?
One last thing, before making your decision, ask about tax benefits. Your insurance agent or your accountant should be able to provide country-specific advice.
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