Yes, it’s important to invest in private disability insurance because it acts as a safety net when the FERS (Federal Employees Retirement System) under disability system is unable to keep you afloat in the face of adversity. As much as FERS acts as a security system, it is not entirely reliable because of its restricted conditions and small-sized income payments. It is possible to be covered under FERS and also have your own private insurance, which gives you breathing space when FERS is not favourable for you. While reading this blog, you will understand the importance of having private disability insurance.
Why do you need private individual disability insurance?
Tax-free payouts: Unlike FERS, where your payout is reduced as taxes are cut out, the payout decreases from 60% to 40% after the first year of payout. Whilst the private disability insurance is tax-free, it provides a steady, customized income.
Customisable: Private disability insurance is more flexible; you are able to choose the benefits amount, the waiting period and the duration of the insurance, and customize your elimination period (how long before payment starts).
Flexible: Unlike FERS, which is tied to your federal job, private disability is not limited to your job, but rather it is applicable regardless of where you work.
Personal disability insurance sums up all your income streams: While FERS uses High-3 salary average to calculate your income payments, which is not always your income, a personal policy considers your whole financial picture, including your savings, investments, social security and other income streams. And calculate your income payments and, in turn, receive higher income.
What does Individual disability insurance cover?
Income replacement: With this policy, you are able to receive income when you are limited by sickness or illness and unable to go to work. It brings ease knowing that you are still able to receive some income in times of hardship, especially if you have people who look up to you.
Daily expenses: The coverage of the policy can help you handle daily expenses for yourself or your family when you are unable to receive income due to a sickness or injury. This reduces the stress and burden.
Medical Costs: You are able to cover medical costs with individual disability insurance, and claiming it is shorter than the FERS disability insurance, which takes a longer period of time.
Conclusion
Investing in private disability insurance will give you breathing space, as it is more reliable and gives you better room to be flexible and customized to your needs. The policy will help you navigate the challenges with a steady income for yourself and your family. As you plan on getting your disability insurance, Insure Horizons, headed by Jas Hans and his experts, is here to make it happen for you. We will help you plan your policy according to your finances and guide you every step. Now is the time to set your policy so that it fits your actual life expenses in times of need.
FAQ’s
- How much income does personal disability insurance cover?
The aim of personal disability insurance is to maintain your standard of living even if you are unable to work, so it covers up to 60% to 90%, varying with each insurance company.
- What is the benefit duration period of personal disability insurance?
Personal disability insurance benefit duration period varies. They are basically split into two, the first one being short-term, which could be months to 2 years for temporary issues like recovery or surgery, and the second would be long-term, which takes years, often for permanent conditions.
