Friday, March 2

What You Need to Know About Disability Insurance

Disability insurance has gained quite a significant role and recognition in the insurance industry. This can be attributed to the fact that insurance companies offering disability insurance to the general public puts great weight on the overall health of a prospective client. Such an action is explainable in view of the nature of a disability insurance.

A disability insurance insures a person in case he or she suffers a disability, that would prevent him or her from working, due to various causes. Said disability may be caused by an accident, whether it be work-related or not, or a fatal illness. When an insured person suffers a disability that would prevent him or her from performing his or her work, the disability insurance provides money to the said person to compensate for his or her loss of income. Thus, in this kind of insurance, the insurance company assumes the risk that the insured will get injured in the future. The insurance company earns a profit by way of premiums if the insured does not suffer any disability.

Moreover, with this kind of insurance, insurance companies always make sure that the prospective client is healthy and in good physical condition. By failing to evaluate the physical condition of a prospective client, an insurance company runs the risk of losing a substantial amount of money since the risk that said prospective client might get disabled or injured is very high.

Disability InsuranceIf it is discovered, after a thorough physical examination, that a person who is trying to qualify for an insurance policy is not healthy, an insurance company will either refuse to enter into an insurance contract with the said person or will increase the premium rate that the person has to pay. The latter option is exercised in order to minimize the possible losses that an insurance company might suffer in case said person becomes disabled. Given this fact, a person who is applying for insurance must make sure that he or she is healthy and that she reveals any medical condition that they might have. Trying to keep it a secret from insurance companies might prove to be more troublesome.

The reason why an insurance company would want to make sure that a person is healthy before providing them with the policy is because there are certain illnesses that are exempt from the coverage. A disability caused by a fatal illness is usually covered by a disability insurance contract. On the other hand, illnesses such as leukemia, cancer, and other diseases that were only acquired after securing the insurance contract are usually covered by disability insurance. If the insured suffers from any of these illnesses and is subsequently incapacitated, he or she can claim for disability benefits from the insurance company.

On the other hand, chronic illnesses such as asthma and other hereditary diseases that were acquired before the insured person secures a disability insurance are not covered by the policy unless said diseases were made known to the insurance company beforehand and the latter still entered into a contract of disability insurance with the insured.

However, since there is a thin line between these two types of illnesses, conflicts between the insurance company and the insured often arise. This happens when the insurance company rejects the claim of the insured on the ground that the same is not covered by the insurance policy. After the said rejection, the insured would usually elevate the issue to courts by way of a law suit.
Advantages of Having Disability Insurance:
Among the many advantages that one would derive from applying for a disability insurance would be the financial support that would provided to one's family should something happen. This is especially so if you are the breadwinner of your family and have many people depending on you.
Just take individual disability insurance for example. This is often secured by companies for their employees and would cover for an individual, financially, during the period that he or she is unable to work. To put it in simpler terms, think of this coverage as a type of protection. Did you know that according to statistics, there is at least a 30% chance that you'll get disabled by the time you reach the age of 60? It may not worry you now but there's no use in waiting for it to happen. Preparing now is always the best thing to do.

The same goes for people who are currently self-employed. It is important that they secure one for themselves as well.

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