People who are self-employed have various types of insurance options that are available. One type of policy that can be purchased is for disability insurance. This type of insurance will pay a portion of an individual's income while he or she is unable to work. The length of the policy can range from two years to five years to the rest of an individual's working life.
- A disability income insurance policy is available in two types, which are called short-term and long-term policies. A short-term disability policy pays benefits for a specific period such as from one to two years. A long-term policy pays benefits for an extended period such as ten years or up to age sixty-five or sixty-seven.
- When shopping for a disability income policy, there are many factors to consider. These may include finding an agent, determining the amount of coverage that is needed and knowing how much coverage is available. Many disability income policies for self-employed individuals only provide up to fifty or sixty percent of gross income.
- A disability income policy typically has a waiting period that needs to be met before benefits are paid. Individuals who are self-employed need to determine how long a waiting period will be needed when purchasing a policy. The length of the waiting period also has an effect on the total cost of the policy.
- There are many factors that can affect the premium that needs to be paid for a disability income insurance policy. A short waiting period will increase the cost of the policy, while a longer waiting period will decrease the cost. The premium is also affected by the length of the benefit period for the policy. The longer the policy is paying a benefit, the more it will cost for the policy.
- An individual's occupational class is used to determine the risk category for an insured. When an individual is in a high-risk occupational class, at least three years of records will be needed to prove the amount of income earned. When the occupation class is verified, an individual will be considered disabled when he or she can no longer perform his or her job duties.
- A disability income policy should be guaranteed or non-cancelable, meaning it is automatically renewed as long as the premiums are paid on time. These types of policies cannot reduce the amount of benefits that are stated in the policy. A policy that is not guaranteed or non-cancelable can have rates and benefits modified by an insurer at any time.
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