When evaluating disability income insurance policies, it’s helpful to consider the following.

Definition of disability. 
You can typically choose between “own occupation” coverage and “any occupation” coverage. With “any occupation” coverage, you can claim disability only if you are unable to perform any type of job. This type of coverage is generally less expensive than “own occupation” coverage.

Amount of monthly coverage 
You can purchase disability insurance that will replace a certain percentage of your income —normally up to 50% or 60% of your pre-disability income. You should purchase coverage that will enable you to meet your monthly financial obligations.

Waiting period
The waiting period represents the amount of time that must pass between the date you become disabled and the date that disability income payments begin. The longer the waiting period, the less expensive coverage will be.

Benefit period 
The benefit period can range from several months to life. The longer the benefit period, the higher the cost of insurance.

Traditional Disability Coverage

Individual – pays a monthly benefit to an individual during a period of prolonged disability. Usually pays 50-60% of earned income. The longer the policy’s payout period and the higher the monthly payout, the higher the policy premium will be.

Retirement Security – DI Retirement Security helps individuals to continue saving for retirement if they become too sick or hurt to work. 

Business Overhead – Overhead Expense (OE) insurance reimburses a business owner for business expenses incurred during a disability. This coverage helps owners keep their businesses running when they are too sick or hurt to work.  Covered expenses are typically those that are deductible for federal income-tax purposes, such as premiums for malpractice insurance, mortgage/rent, salaries, utilities, water, and more.

Specialized Disability Coverage is provided by Principal

Business Loan Protection – The Business Loan Protection (BLP) is arider included on a Business Overhead policy that covers loans taken out for business-related expenses, such as:

Purchase or expansion of a practice or business
Purchase of expensive equipment
Facility renovations
An increase in working capital or build-up of inventory

Key Person
A Key Person Replacement (KPR) insurance policy provides benefits to a business if a key employee critical to the success of the business becomes totally disabled. Benefits can be used at the discretion of the employer.

Disability Buy Out
Disability Buy-Out (DBO) insurance funds a buy-sell agreement to buy out a totally disabled business owner. This coverage maximizes the financial return when a business is transferred, while minimizing tax liability.

A disability income insurance policy could make the difference between financial security and financial hardship. Don’t wait to consider this protection until it’s too late.

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