Disability Insurance: Making Sure the Income Stream Doesn't Run Dry
How to Shop for an Individual Policy
There's no question that once you've found a policy that offers all the important features you need, the cost of the policy becomes a major consideration. But another consideration that is equally important is the claims-paying ability of the company. Make sure the insurance company has the financial strength to make payments as long as you're disabled.
Look for companies that are well known for their line of comprehensive individual disability policies. The companies should be rated highly by rating services such as AM Best, Standard & Poor's, Moody's, and Duff & Phelps.
It is important that you understand what the ratings mean. Each of the rating companies has its own classification system for evaluating the claims-paying ability of an insurance company.
In addition to the basic policy, disability insurance can be purchased with add-on features called "policy riders."
What You Need ... What You Don't
In addition to the basic policy, disability insurance can be purchased with add-on features called policy riders. Most riders are expensive and may not be worth the extra cost. Remember, basic transportation is what's important. You're better off putting money into your retirement plans than adding frills to your disability program.
Disability policies are issued in two basic forms: Non-cancelable and Guaranteed Renewable.
The best type of policy is one that is both non-cancelable and guaranteed renewable. Your policy cannot be canceled and the premium remains fixed until you reach a specified age.
Here is a list of provisions and riders that may be available depending on the policy you purchase.
Group Association Policies Can Save You Money
If you belong to an alumni, fraternal, or professional association, call the association's benefits administrator to see if they offer disability coverage. Since disability insurance offered through an association is written on a group basis, the rates are less than those for an individual policy. However, their underwriting requirements may be less flexible since they are dealing with large numbers of people. If you have any pre-existing conditions, you may be ineligible for coverage.
Many group policies have similar features to an individual policy. Here are some differences:
NOT FDIC INSURED
NO BANK GUARANTEE | NOT A DEPOSIT
NOT INSURED BY ANY FEDERAL GOVERNMENT ENTITY
Securities and advisory services are offered through Santander Investment Services, a division of Santander Securities LLC. Santander Securities LLC is a registered broker/dealer, Member FINRA and SIPC and a Registered Investment Advisor. Insurance is offered through Santander Securities LLC or its affiliates.