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Welcome to Garv Financial, my name is Gaurav Bhola, this tutorial is on how does disability insurance work. Disability insurance is one of the most important insurances you need for long-term financial success. When I worked as a financial advisor, I recommended appropriate risk management strategies that included disability insurance as well. Disability insurance pays a portion of your income during the disability. It is also known as income protection because it protects your income during an illness or an accident.

Types of Disability Insurance:

The two basic types of disability insurance are; short-term disability and long-term disability. Short-term disability is exactly what it says, short-term. You usually have a waiting period of between 0-30 days before the insurance kicks in, and generally, a maximum benefit period of 24 months. Long-term disability; the waiting period depends on your policy but it's usually a minimum of 30 days to 180 days. The income protection benefit can last as little as 2-5 years or until the age 65.

Types of Disability Insurance Policies: The three types of disability insurance policies are Conditionally Renewable, Non-Cancelable, and Guaranteed Renewable.

Conditionally Renewable policy; in this type of policy, the insurance rates can increase or your disability insurance can be canceled at any time by the insurance company. So, it's best to avoid these type of policies.

Non-Cancelable policies; this is a policy that cannot be canceled by your insurance company except for nonpayment of premiums. It is annually renewable without increase in premiums or loss of benefits. This is the best option for disability insurance.

Guaranteed renewable disability policy; your policy will stay enforced as long as your premiums are paid while your insurance is guaranteed renewable, however, your premiums can increase at the future based on any passed claims for injury or illness.

Disability Insurance Offerings:

There are two types of disability insurance policies; group disability provided through your employer, and individual personal policy that you acquire yourself. The group policy is offered at work most of the times. It is recommended if it is offered to take advantage of it. This is because group disability insurance does not make you go through an underwriting process as well as getting the insurance at a discounted group rate. Remember, that once you file a disability claim, it takes anywhere from a few days to several weeks for the disability claim paper-work to be processed and for you to get your first disability check.

Usually, the coverage amount is only 60-65 % of your income, and after taxes, you might be left with only 45-55 % of your income. Can you survive and maintain the standard of living at 45-55 % of your income? Here in I urge you to strongly evaluate group disability insurance through work.

The personal disability insurance policy can be purchased at an individual level and can enhance your income protection to 70-80 % of your income, meaning that in conjunction with your group policy, you maybe able to receive up to 80 % of your income unlike disability benefits through a group plan which are taxed. The disability income you receive through an independent policy is tax-free. Remember, if a disability were to occur, you would rapidly cannibalize your financial resources quickly.

Disability Insurance Benefits:

Hopefully I have helped understand the importance of and benefits of disability insurance. If disability were to occur, by having income protection, you can avoid consuming all of your finances and meet your daily expenses or regular expanses. You can maintain your standard of living even during the disability depending on how much protection you have. My name is Gaurav Bhola, thank you very much for watching the tutorial, how does disability insurance work, more tutorials are available GarvFinancial.com.

Welcome to Garv Financial, my name is Gaurav Bhola, this tutorial is on how does disability insurance work. Disability insurance is one of the most important insurances you need for long-term financial success. When I worked as a financial advisor, I recommended appropriate risk management strategies that included disability insurance... click to read more