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OFIR's Tips on Protecting Your Financial Future with Disability Insurance
November 17, 2011 - In this economic environment, many Michigan consumers may not think their most valuable asset is their ability to work. But if illness or injury were to keep you from earning a living do you know how you would pay your bills?
The U.S. government estimates that more than one in four of today's 20 year-olds will become disabled before reaching retirement age, but only 31 percent of current U.S. private industry workers have long-term disability insurance as part of their insurance benefits.
The Office of Financial and Insurance Regulation (OFIR) today offered tips for Michigan consumers considering individual long-term disability insurance options
“Understanding disability insurance can protect a consumer’s most valuable asset - their ability to earn a living,” OFIR Commissioner Kevin Clinton said.
Disability insurance is not the same as workers' compensation. In the case of disability insurance, the injury or illness does not have to be the result of a workplace incident or exposure
There are two types of disability insurance available to individuals: short-term and long-term. Short-term will typically replace a portion of the policyholder's salary from three to six months following the disability. Long-term will generally begin six months after the disability and can last a few years or even until retirement age.
Figuring How Much Long-Term Coverage You Need
Before purchasing long-term disability insurance, determine how much income you need to meet critical financial obligations such as rent/mortgage, food, fuel/transportation, utilities, etc.
Comparing Disability Policies
When considering long-term disability policy options, here are several definitions and benefits you should carefully compare to determine the best coverage for your future needs:
Social Security Benefits
Social Security pays disability benefits to people who cannot work because of a medical condition that is expected to last at least one year or is terminal, and for individuals who meet two earnings tests.
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