What are the Two Most Common Types of Disability Insurance? are listed and explained in this article for your perusal.
Private health insurance for disabled
The two most common types of disability insurance are short-term disability policy (STD) and long-term disability policy (LTD). This article will exclusively explain them using their distinguishing features.
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Short-term disability policy
This disability policy will be explained using the following highlighted points below:
1. Waiting time
This insurance policy maintains has an expected period of fewer than 24 hours to 336 hours which can be likened to 14 days.
2. Speculated period
This insurance coverage has a speculated period of two years for the insured to enjoy the agreed insurance benefit.
3. Termination of the insurance company
This disability policy can be annulled or terminated by the insurance company after the date of the premiums has been reached.
4. Right to renewal
It gives the insured the right to renew the term again or terminated the policy at will in every fiscal year. Even after the renewal and similarly, the premium benefits cannot be reduced as well.
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5. There is a choice of guaranteed renewable policy
Short-term disability policy offers a certain renewable policy by providing the insured with the right to either renew the policy with the same benefits or sustain the policy without any cancelation of the policy by the company.
6. The cost of living
In short short-term disability policy, the payout is insured depending on the cost of living of the disabled but it is not paid in total. This payout can cover about 60 to 80 percent or as speculated in the policy.
Long-term disability policy
This disability policy will be explained using the following highlighted points below:
1. Waiting time
This insurance policy has an expected period of three weeks to three months.
2. Duration of the disability policy
This insurance ensures that the insurance coverage is sustained throughout the lifetime of the insured.
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3. No cancelable of the policy
This insurance disability policy is referred to as a no-cancelable policy and this signifies that the insurance policy can only be terminated on the demise of the insured.
4. There is no renewal of the policy
It is important to know that there is no renewal of the policy as it is stable and fixed.
5. Defined premium
The payment of premiums is well-defined with various suitable premium benefits.
6. Right of the insurer
The insurer has the right to increase the insured premiums provided it does it is in line with the policy and no favoritism is attached.
7. Additional purchase options
The disability insurance company offers the disabled the right to purchase additional or extra insurance at a later time or an advanced year of the policy.
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8. Massive benefits
There are massive and organized benefits in long-term disability insurance such that the value of benefits the insured gets over time from the disability insurance company is reliant on other corresponding benefits only as a disabled person.
Also, another benefit is that there is a return of premium as the insurance company returns part of the premium if no claim is made for a particular period stated in the policy.
9. Determination of the value of the payout
The determination of the value of the payout depends solely on the insured policy like the target amount received when all the policies are united or mixed and explain why it does not apply to short-term disability insurance.
10. The cost of living adjustments
Here, long-term disability insurance considers the cost of living in a different dimension by taking into consideration certain adjustments.
Under long-term disability insurance, the cost of living adjustments increases the disability benefits of the insured over time based on the rising cost of living.
It is often determined by the measurement of the consumer price index and other Gross Domestic Product (GDP) indicators.
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The insured will have to pay a higher premium if he or she prefers the cost of living adjustments in the long-term disability insurance policy.
Conclusion
Disability insurance has several policies that cannot be avoided nor ignored but are bounded by these two major common types of disability insurance which include short-term disability (STD) and long-term disability (LTD).
When making a proper selection on the type of disability insurance, it is essential to study and understand these features as there serve as a guiding principle in the purchase of any policy.
