As a Pennsylvania resident, you should be aware of the Pennsylvania Disability Insurance coverages, so you can find the best policy to fit your Pennsylvania Disability Insurance needs.
Understanding Pennsylvania Disability Insurance
Pennsylvania Disability Insurance pays a monthly or weekly amount if the policyholder is disabled and cannot work. Some policies pay only in case of an accident, others pay only if the policyholder has an illness and some pay benefits in either case. Pennsylvania Disability Insurance insurance policies will not cover claims that are covered by workers’ compensation.
The Types Of Pennsylvania Disability Insurance
There are two types of disability policies: Short-Term Disability and Long-Term Disability:
Short-Term Disability policies have a waiting period of 0 to 14 days with a maximum benefit period of no longer than two years.
Long-Term Disability policies 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.
Insuring Against A Loss Of Income
If you were disabled and unable to work as a result of an accident or illness, what would you and your family do for income? Pennsylvania Disability Insurance, which complements health insurance, can replace lost income. Forty-three percent of all people age 40 will have a long-term (lasting 90 days or more) disability event by age 65.
There are three basic ways to replace income:
Employer-paid Pennsylvania Disability Insurance - This is required in most states. Most employers provide some short-term sick leave. Many larger employers provide long-term disability coverage as well, typically with benefits of up to 60 percent of salary lasting from five years to age 65, and in some cases extended for life.
Social Security Disability Benefits - This can be paid to workers whose disability is expected to last at least 12 months and is so severe that no gainful employment can be performed.
Individual Pennsylvania Disability Insurance - Other limited replacement income is available for workers under some circumstances from workers compensation (if the injury or illness is job-related), auto insurance (if disability results from an auto accident) and the Department of Veterans Affairs.
For most workers, even those with some employer-paid coverage, an individual Pennsylvania Disability Insurance policy is the best way to ensure adequate income in the event of disability. When you buy a private Pennsylvania Disability Insurance policy, you can expect to replace from 50% to 70% of your income. Insurers won’t replace all your income because they want you to have an incentive to return to work. However, when you pay the premiums yourself, disability benefits are not taxed. (Benefits from employer-paid policies are subject to income tax.)
Pennsylvania Disability Insurance policies have two different protection features that are important to understand.
Non-cancelable - means the policy cannot be canceled by the insurance company, except for nonpayment of premiums. This gives you the right to renew the policy every year without an increase in the premium or a reduction in benefits.
Guaranteed Renewable - gives you the right to renew the policy with the same benefits and not have the policy canceled by the company. However, your insurer has the right to increase your premiums as long as it does so for all other policyholders in the same rating class as you.
In addition to the traditional Pennsylvania Disability Insurance policies, there are several options you should consider when purchasing a policy:
Additional Purchase Options - Your insurance company gives you the right to buy additional insurance at a later time.
Coordination Of Benefits - The amount of benefits you receive from your insurance company is dependent on other benefits you receive because of your disability. Your Pennsylvania Disability Insurance policy specifies a target amount you will receive from all the policies combined, so this policy will make up the difference not paid by other policies.
Cost Of Living Adjustment - The cost of living adjustment increases your disability benefits over time based on the increased cost of living measured by the Consumer Price Index.
Residual Or Partial Disability Rider - This Pennsylvania Disability Insurance provision allows you to return to work part-time, collect part of your salary and receive a partial disability payment if you are still partially disabled.
Return Of Premium - This provision requires the insurance company to refund part of your premium if no claims are made for a specific period of time declared in the policy.
Waiver Of Premium - This clause means that you do not have to pay premiums on the policy after you’re disabled for 90 days.
