Affordable low cost life and disability insurance

Most people think they do not have to purchase affordable low cost life and disability insurance because they are already covered through work. But most affordable low cost life and disability insurance through employers only provides 60% of your salary. Further, affordable low cost life and disability insurance policies usually set a monthly maximum of $10,000, which is less than 60% of highly compensated employee's salary. Another problem is that these benefits are fully taxable. This means your net payment is a lot less than the 60% of your salary. These employees find themselves trying to survive on 40% of their salary.

When shopping for a affordable low cost life and disability insurance policy, look for the strength of the company. You need to determine whether the insurance company is financially sound. Also make sure they will be able to pay their claims in the future.

On your contract, check the renewability. There are three options.

• Non-cancelable contract. This type of contract locks in your rates and benefits. The only person that can make changes is you, not the insurance company.

• Guaranteed renewable policy. Once you have purchased your affordable low cost life and disability insurance policy, the insurance company cannot drop you but they can raise the prices.

Conditionally renewable policy. The worst type of affordable low cost life and disability insurance policy is the conditionally renewable policy. The insurance company can raise rates at any time or put any condition on the policy.

Pay attention to how the insurance company defines "total disability". The most lenient, consumer-friendly approach is "own-occupation disability". This means that if you are disabled and cannot perform your principal job duties, you will be paid your affordable low cost life and disability insurance benefit, even if you can perform other tasks.

The most stringent definition of "total disability" is "any occupation disability". This means that you will not be paid any affordable low cost life and disability insurance benefits unless you are unable to do any kind of work and are completely unemployed. You will find that many insurance companies define "disability" somewhere in between the two extremes defined above.

It is prudent to purchase partial disability or residual coverage. This means that the insurance company will pay partial disability benefits if you can work at your job only part time. Their employer would pay for the time actually worked and the partial disability coverage would pay the other portion.

The price of affordable low cost life and disability insurance premiums typically cost 3% of your annual income. This varies based on factors such as age, gender, occupation and health history. When pricing your affordable low cost life and disability insurance policy, the insurance company will categorize you according to your occupation class. Your affordable low cost life and disability insurance policy will be more expensive if your occupation is more likely to results in a disability.

As you can see, it is financially prudent to purchase affordable low cost life and disability insurance if you would lose your income because of a disability. Only the wealthiest people are not in this category. There are many factors involved when purchasing affordable low cost life and disability insurance. Take your time and educate yourself about affordable low cost life and disability insurance.

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