There are two types of disability policies: Short-Term Disability (STD) and Long-Term Disability (LTD):

• Short-Term Disability policies (STD) have a waiting period of 0 to 60 days with a maximum benefit period of no longer than two years.
• Long-Term Disability policies (LTD) have a waiting period of several weeks to several months with a maximum benefit period ranging from a few years to the rest of your life.

Total Disability
The definition of total disability is: Because of sickness or injury you are unable to perform the material and substantial duties of your regular occupation, or occupations if more than one, in which you are engaged at the time of disability.

Residual Disability
A residual disability can be thought of in two different claim scenarios. Think of a residual disability as a partial disability, or as a recovery benefit. The residual disability rider can act as an unlimited recovery benefit, and does not require a loss of time or duties in order to pay a claim. For individuals who own their own business, are in sales, or are the chief rainmaker for their company, there must be a residual disability rider on your policy. By default our agency will always include at least a two year residual disability rider when you request a long term disability insurance quote.

Presumptive Disability
Should you unfortunately suffer the total and complete loss of hearing, speech, sight, or the use of any two limbs the insurance company will pay you first day benefits. In other words, you do not need to wait through the elimination period before you become eligible for monthly benefits if you suffer one of those losses.

Disability isn't always "total." You may suffer a partial (or residual) disability that limits your ability to work and results in decreased income - or an initial total disability may be followed by an extended period of residual disability. This is where the residual/ partial disability rider becomes very important. Should your income drop, due to a sickness or injury, by more than 20% of your previous income, the insurance company will begin to make payments to you to replace this lost income. Think about this, how many people do you know of who have had to take time off of work because their doctor told them to after a heart attack, or do to pregnancy, etc? Many claims for residual disability occur after a total disability. The client goes back to work, and finds that they have to work even harder than they had worked before their disability in order to get their income back up to their previous level. The policy will continue to pay in order to help fill the gap between your post disability and pre-disability income.

The elimination period is the period of time between the onset of a disability, and the time you are eligible for benefits. It is best thought of as a deductible period for your policy. The shorter your elimination period the higher your premiums will be. Once the elimination period has been satisfied, you receive actual benefit checks at the end of the month. In reality, a 90 day elimination period means you are four months away from getting any claims dollars on a disability insurance claim.

A benefit period is the period of time you are eligible to collect benefits while on a disability insurance claim. If a sickness or injury occurs that prevents you from performing the material and substantial duties of your occupation, the elimination period begins. Once the elimination period has been satisfied, monthly benefit checks will begin to come in at the end of the month. The maximum amount of months that these checks can possibly come in is your benefit period. Your benefits stop when you return to work in your occupation, or depending on the contract to another occupation making the same income.

Non-Cancelable & Guaranteed Renewable
The strongest possibility as far as renewability goes is a Non-Cancelable and Guaranteed Renewable Policy. It guarantees you that after you place a policy in-force that there will be no changes to your premium schedule, your monthly benefits, or your policy benefits to age 65 or a certain age. The insurance company legally can not change a thing unless you want them to. Many people do not have a guarantee that their income will never go down again, under a Non-Cancelable policy even if your income goes down later in life, if you are totally disabled the company will pay you the total disability benefit you originally placed in-force. Under a Non-Cancelable policy even if you changed jobs from being a white collar, low-risk occupation to a professional weight lifter the company could not change your benefits for the worse. Quite simply, there is no reason to go with an individual disability insurance policy that is not Non-Cancelable and Guaranteed Renewable.

Guaranteed Renewable
This type of renewability feature is a step down from Non-Cancelable and Guaranteed Renewable. The basis behind the definition says that an insurance company will probably not change anything about the policy, but they can! They can change the premium by state, policy year, or occupational class with approval from the state.

2 Year Max for Mental & Nervous Disorders
This is the most common exclusion within a disability insurance policy. Not every company has this exclusion within the policy, there are companies that put no limits for claims caused by mental and nervous disabilities. Basically if you own a contract with the 2-year mental and nervous exclusion, if your disability is caused by stress, anxiety, depression, Dementia, or any other mental-nervous disorder you may very well be limited to a two year benefit period.

Exclusion of Payment of Claims if Caused During a Crime
This is a fairly common exclusion, if you are disabled while committing a felony the disability insurance policy does not pay a claim.

Act of War
There are some disability insurance policies on the marketplace that do not pay claims for disabilities that are a result of an act of war. This is not extremely common, but it does exist in some contracts.

Pre-Existing Conditions
A pre-existing medical condition is any disability which is caused by or results from an injury, sickness, or pregnancy which occurred during the 12 months prior to the date your coverage began or was increased. This exclusion also applies to disabilities which were diagnosed, or for which medical care was received, during this 12-month period.

While this is an optional rider, nobody representing our firm will ever allow you to purchase a policy that does not have this rider on the policy. It is quite possibly the most important rider available.

Should your income drop, due to a sickness or injury, by more than 20% of your previous income, the insurance company will begin to make payments to you to replace this lost income. Think about this, how many people do you know of who have had to take time off of work because their doctor told them to after a heart attack, or do to pregnancy, etc? Many claims for residual disability occur after a total disability. The client goes back to work, and finds that they have to work even harder than they had worked before their disability in order to get their income back up to their previous level. The policy will continue to pay in order to help fill the gap between your post disability and pre-disability income.

Also called Guaranteed Insurability, this ensures that your coverage will not be restricted by your lower income when you purchased your policy. In essence, if your income has increased and you wish to add more coverage, you can do so without having to purchase additional policies. It also means that you will not be subject to tests or other proofs of medical insurability. It also will allow you to be covered further if you develop conditions that normally would bar you from coverage.

This provision requires the insurance company to refund all premiums paid minus any claims at the age of 65.

This type of insurance provides monthly disability income benefits during periods when the insured is not receiving benefits from a government social insurance program (such as Social Security disability or retirement benefits, workers? compensation, or state disability benefits). If and when the insured qualifies for a government program, SIS benefits are terminated or reduced by the amount of the government benefit.

A built in feature or optional benefit that increases annually an insured's monthly benefit without evidence of either medical or financial insurability.

This clause means that you do not have to pay premiums on the policy after you?re disabled for 90 days.

Often referred to as a COLA rider, this rider only kicks in if you actually go on a disability insurance claim, and then only if the disability lasts for more than one year. Depending on the percentage option you elected when you took out the policy, it will increase your monthly benefit every year while you are on a claim along with the CPI up to the maximum you elected. It is quite often the most expensive rider available on a disability insurance policy. It is designed to protect you against inflation.

Your chances of suffering a disability are much more likely than being in an auto accident, dying during your working years or having a fire in your home. What many people do not realize is the odds of suffering a long term disability during your lifetime are only increasing. As medical technology improves, your chances of surviving an illness or accident increase. Diseases that used to be a death sentence now only mean a period of long term disability during which you recover from treatment. Cancer is a perfect example of a disease that more people are beating every day with better medical technology, however during chemotherapy most people are not able to go to work every day. Heart attacks used to kill a much larger percentage of people than they do now, however after having surgery most people need to take several months off.

Death - 1 out of every 106 people
Home Fire - 1 out of every 88 homes
Serious Auto Accident - 1 out of every 70 autos

Disability - 1 out of every 8 people

Myth 1: My chances of becoming disabled are small.

• Fact: During your working years, you have a greater chance of becoming disabled than dying before the age of 65.

Myth 2: Social Security will pay if I ever become disabled.

• Fact: 70% of all disability applicants are rejected by the Social Security Administration. In fact, according to the 2003 Social Security Handbook, five full calendar months must pass before any disability benefits begin from the government. To qualify, the disability must be one that "can be expected to result in death, or which has lasted or can be expected to last for a continuous period of not less than 12 months," and the disability must prevent the individual from being able to perform ANY type of gainful employment.

Myth 3: I Have enough savings to get by.

• Fact: You may have personal savings in the event of a disability, but is it enough? One year of disability could wipe out ten years of savings, that's if you have 10 years of savings. In most cases, expenses increase with the onset of a disability.

Myth 4: I can sell my assets

• Fact: What would you sell? Assets sold under forced conditions are often sold below market value. No one wants to sell prized possessions.

Myth 5: I can rely on my spouse's income.

• Fact: Today, many families depend on two incomes. The loss of one income can be devastating.

Myth 6: I can borrow money.

• Fact: Who will lend you the money? Even families and friends can only help so much. Plus, borrowing can be difficult without an income.

The percentage of people who can expect to suffer a long term disability of 90 days or more before they reach the age of 65.

Age	Percentage	Disabled
25	52%	1 out of 2
35	48%	4 out of 9
40	45%	4 out of 9
45	40%	2 out of 5
50	34%	1 out of 3
55	27%	1 out of 6
60	16%	1 out of 6

If a disability of 90 days or more lasts two years, it will probably continue longer, even for life.

Age when disabled 90 days	Percentage still disabled after 2 years and 90 days	Percentage still disabled after 5 years
25	63.50%	44.20%
35	69.70%	52.60%
45	73.60%	58.00%
55	77.60%	59.60%