Don’t Count on Social Security
A few individual do manage to qualify for disability benefits from Social Security. However, the Social Security definition of “disability” is so strict that, in 2009, only 37.8% of initial claims for Social Security disability benefits were accepted. Obviously, something else beyond Social Security is needed.
Individual Disability Income Insurance
If group coverage is not available, the solution may be individual disability income insurance. Although individual policies can cost more, as long as you pay the premiums with after-tax dollars, the benefits are not taxable. Plus, an individual policy allows you to tailor its terms to fit your own needs. When shopping for and individual disability policy, consider the following:
- Company strength: You need to know if the company is financially sound.
- Definition of disability: Look for a policy that defines disability in the broadest terms possible. Some policies will permit you to work in a different occupation and still collect disability benefits.
- Elimination period: How long must you wait for disability payments to begin?
- Benefit period: How long will you need coverage? Both short-term and long-term disability benefits are available.
- Inflation protection: Try to find a policy that adjusts benefits for inflation.