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Be Prepared for Serious Disability

March 16, 1986|PETER WEAVER

If you're a working person, what would happen if you lost your job because of accident or illness?

If you're not sure of the answer, you'd better check on it pronto. You may well have some sort of life insurance and health insurance, but you may not have disability insurance.

This type of coverage helps replace income you lose when you're unable to work for a prolonged period because of sickness or injury.

Check Out the Coverage

Most employers will carry you for a little while, maybe a month or so. Check out this free coverage. Will you get full pay, or have your check docked for missed work?

If you are injured on the job as part of your work, you should qualify for Workers Compensation. Most employers are supposed to have this kind of coverage by law. Check to see if your employer has it and that your particular job is covered (some types of part-time jobs are not covered).

If you are covered by Social Security (money withheld from your paycheck), you automatically have a certain amount of disability coverage.

If you are still unable to work after six months because of an accident or illness, you can apply for Social Security benefits. But they are hard to get. You have to be totally disabled and not able to do any kind of work, let alone the job you had.

An increasing number of employers are offering disability insurance coverage to employees these days. It's either free or you pay a relatively small premium on your own.

A Ceiling Amount

Usually this employer-type coverage will pay up to 60% of your wages while you're disabled. And there's usually a cap on how much monthly income you can have from all sources (even your own savings, support and alimony).

Unions and professional associations may also offer this type of group coverage. Check it out. It could provide low-cost protection. But it may not cover your needs.

People who have limited low-cost (or free) disability coverage and certainly people who don't have any coverage at all should look into purchasing their own, individual policy.

What to Consider

If the insurance company or agent staggers you with a premium cost quote, don't despair. Listen to John Cammack, vice president, Alexandra Armstrong Advisors (a nationally known financial planning firm):

--Shop around at least five or six well-known insurance companies and/or independent agents. Prices vary widely.

--Go as long as you can afford before payments begin. This is the "waiting period." By going six months, instead of one month, you can almost cut your premium by half.

--Get a policy that takes you to age 65. If you can't afford that, get one that covers payments up to 10 years.

--Make sure they define "disability." It should pay you if you can't perform the duties of your own job or profession. Some won't pay if you can do any menial work.

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