What is your driving factor? Cost? Benefit amount? Riders? When it comes to buying disability insurance, it is important that you prioritize what you are looking for in your policy.
Disability insurance can be very expensive, yet if it is not set up properly, it can be detrimental to you.
Therefore, it is important to prioritize what you are looking for in an individual disability insurance policy:
1) Monthly benefit. Keep in mind that the monthly benefits are tax free if you pay with after tax dollars. Determine how much benefit you really need if you can’t work.
2) Benefit period. The younger you are, the longer your benefit period should be since you have more years to work and probably less savings. Once you reach age 50, you may be able to consider a shorter benefit period such as 5 years. If you were totally disabled at age 50, you may be able to withdraw from your retirement plan at age 55 without penalty if you are totally disabled.
3) Riders. These are the bells and whistles. Some riders such as automatically increasing your policy benefit or increase options can be free of charge or an additional cost depending on the policy. The residual rider covers partial disability which is a large percentage of claims. This would be important to keep on the policy in most circumstances. The cost of living inflation rider is the most expensive and can be the first to be dropped if you are looking to reduce premiums.
4) 2 Year Mental Nervous Limitation. Some companies allow you to add this limitation to the policy and it can reduce your premiums by 20-40% depending on the company. Determine if this is a priority for you to have on your policy.
For more information about prioritizing disability insurance policies or to request an individual disability insurance comparison, contact Set for Life Insurance today!