Why You Need Disability Insurance / Overview of Types
Why You Need Disability Insurance / Overview of Types
At our website www.oneminutefromnormal.com we ask visitors the question: What if an unscheduled event suddenly seizes control of your business? Are you ready?
Unfortunate fact: None of us will live forever.
Also a fact: One out of every four US workers will suffer a disabling injury prior to retirement. In fact, nearly 20% of Americans are currently living with a disability.
While the chance of suffering a disabling injury is not as great as dying, the risk is still too high to be ignored. That is why purchasing disability insurance can be as important as purchasing life insurance. While we don’t focus on selling disability insurance, we believe you should be aware of what is available.
Employer supplied disability insurance – Since on-the-job injury is one of the most common reasons for disability, employers provide the second largest form of disability insurance. (The federal government, through Social Security Disability Insurance and Supplemental Security Income, is the largest provider of disability insurance.)
Individual disability insurance – Individuals whose employers do not provide benefits, and self-employed individuals who desire disability coverage, may purchase policies on their own. In general, premiums are higher for policies that provide more monthly benefits, offer benefits for longer periods of time, and start payments of benefits more quickly following a disability claim. Premiums also tend to be higher for policies that define disability in broader terms, meaning the policy would pay benefits in a wider variety of circumstances.
Key-person disability insurance – These benefits protect a company from financial hardship that may result from the loss of a key employee due to disability. The company can use the benefits to hire a temporary employee should the disabled employee’s disability appear to be short-term. With permanent disability, benefits help defray costs related to hiring a replacement, including recruitment, training, startup, loss in revenue and unfunded salary continuation costs.
Business overhead expense disability insurance – This coverage reimburses a business for overhead expenses should the owner become disabled. Eligible benefits include rent or mortgage payments, utilities, leasing costs, laundry/maintenance, accounting/billing and collection service fees, business insurance premiums, employee salaries, employee benefits, property tax, and other regular monthly expenses.
High-limit disability insurance – Traditional disability carriers have limitations on monthly benefits, which limit benefits for high income earners. Monthly benefits typically cap at $20,000-$25,000. High-limit disability insurance is designed to keep individual disability benefits at 65% of income regardless of income level. Coverage is typically issued supplemental to standard coverage. With high-limit disability insurance, benefits can range from an additional $2,000 to $100,000 per month.
KMRD reduces the overall cost of risk for clients by producing a greater value for each insurance dollar spent, while utilizing an enterprise risk management approach to engineer the optimal solution. The firm’s diagnostic process is supported by its unique collaborative technology, KMRD XCHANGE ®
We are dedicated to anticipating risk and helping firms recover from unplanned events that wait on the other side of one minute from normal.
To identify and correct coverage and service gaps in your business insurance risk profile contact us at contactus@kmrdpartners.com before one minute from normal strikes.
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