Is Residual Disability Insurance Enough?

Approximately 20% of Americans are living with some form of disability, and that can mean being unable to work, and dealing with a lot of financial strain. But if you can no longer work due to a disability, and you have disability insurance benefits through your job, you might get some financial help, depending on your policy’s definition of disability. And if you can return to work part-time, you can still receive partial disability, or residual disability benefits – this is great, but is it enough? And if your job doesn’t offer insurance with residual disability benefits, should you buy it on your own, or should you consider purchasing a life insurance policy with disability riders?

Definition of Disability

black and white picture of handicap sign
Life insurance companies have different classifications of who can receive what benefits for how long.

When it comes to receiving disability insurance benefits, it all depends on your insurance policy’s definition of disability: the definition of disability can differ between different insurance companies. Their different classifications of who can receive what benefits for how long  include:

  • Total disability– You are completely disabled and you can’t work, and can receive your insurance benefits because you have lost your income source. 
  • Partial disability– You can still work, but perhaps only part-time or on reduced duties, so you have lost part of your income. In most cases, you will still be able to receive benefits.
  • Extended partial disability– When your partial disability benefits run out, you might be eligible for extended partial disability, which is essentially the same as partial disability, but lasts for as long as you need with reduced benefit amounts. 
  • Presumptive total disability– This is a form of total disability, meaning you will never recover from your disability due to loss of limbs, deafness, etc.  There is no elimination period. 

What Are Residual Disability Benefits & How Do They Work?

As mentioned above, when you are facing partial disability, meaning you can perform some of your duties at work part-time, you will receive residual disability benefits. Typically, you will get full disability benefits that last for 6 months and will then be reduced to a percentage of your monthly income, which will be based on how much income you have lost. Depending on your insurance company, though, a life insurance policy with a residual disability benefit rider could cover more.

Life Insurance Disability Benefits

So the question is: would the residual disability benefits on a disability insurance policy be enough for you or should you invest in a life insurance policy and add disability riders? Life insurance can be very affordable, and will be active for the rest of your life, not only while you are working, and can provide you with help if you become disabled. It will also leave your family with benefits in the event of your passing.illustration of a hand picking a coin from a plant with 2 others next to it

There are multiple long-term disability insurance riders available to add on to your life insurance policy, and many of them are free! In fact, this type of rider usually comes standard on a policy or can be added at no extra cost. Some different riders to consider include:

  • Waiver of premium– If you become totally disabled, and can no longer work or pay for your life insurance, this rider will cover your premiums until you’re no longer disabled, or until you reach a certain age, typically between 65 and 70.
  • Disability income rider- This type of rider provides monthly income payments if you are permanently disabled. Payouts are typically a percentage of the policy’s total coverage amount.
  • Long-term care rider– The money from this rider can help with living expenses if you have a chronic illness and are unable to complete daily tasks on your own.
  • Accelerated death benefit rider– You can get part or all of your policy’s death benefit while you’re still alive if you have a terminal illness. There are no restrictions on how the money can be used, which is great because you can use it to pay for medical care and treatments.

If you want extra protection, you can always have both disability and life insurance if you can afford it. If you cannot, though, consider looking more into life insurance and speaking with a licensed agent who can help identify which life insurance policy will suit you best, as well as which rider would be best in case of disability. Each company offers different rates and policies, which is why it is important to compare all of them. 

Want More Information?

Before purchasing a life insurance policy, you should consider any additional riders you want to add on: riders are a great way to add coverage for unforeseen circumstances. If you need help finding a policy, or with reviewing your current policy, it’s in your best interest to speak to a local agent, who will help you compare plans and see which is the right fit for you. Consider also using online tools to see what is available. To get you started, we have provided the top insurance companies that offer life insurance policies below; each can give you hassle-free assistance and the most competitive rates in the nation. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.

What Is A Life Insurance Disability Rider?

Needing to take time off of work for injury or disability is more common than you might think. In fact, around 30% of Americans are forced to take some kind of disability leave during their working life, which can be a huge financial strain on their family. But did you know that your life insurance policy can also protect your family and finances in the event that you become disabled and are unable to work? Standard life insurance policies don’t cover disability, but many people are unaware that you can add what is known as a disability rider to a policy. One of these riders will give you added peace of mind, but there are few things that you should know about them.  

What Is A Rider? puzzle with a missing piece being added

A standard life insurance policy will not cover all eventualities, but there is a way to extend your policy or to make your terms and conditions more flexible: you can add what is known as a rider to your policy. These optional additions cost extra, but give you benefits that fill the gaps of standard life insurance, and include things like extra coverage for accidental death or coverage for your income so your family doesn’t have to struggle in the event of your death. 

What Is A Disability Rider?

blue handicapped sign
Disability riders can help provide extra income when you are no longer able to work.

An injury or disability can mean an extended period of time during which you are unable to work, as well as worries about how to take care of your family and finances. In order to protect you and your family in the event that this happens to you, you can choose to purchase a disability rider along with your life insurance policy. There are multiple types that you can choose from, or you can purchase multiple riders and combine them. Some of the most common ones include:

  • Disability income rider –  Essentially, this type of rider allows your life insurance policy to also function as disability insurance: you will be provided with a monthly stipend in the event that you can no longer work. Many insurance companies will pay out 1% of the coverage amount of the insurance policy to help replace your income. 
  • Waiver of Premium rider – Having this type of rider means you will not have to pay your life insurance premiums after you’ve been disabled and unable to work for 6 months (some insurance companies will also reimburse you for payments made during that 6-month period). With this rider, you’ll be able to focus on your healthcare expenses, and won’t have to worry about losing your life insurance coverage.
  • Presumptive total disability– If you have one of these riders, your insurance company will immediately pay out your full benefits if you lose sight in both eyes, your hearing, your speech, or the use of at least two limbs, whether you are working or not. With this rider, there is no period of time that you have to be disabled before you begin receiving your benefits.

If you want to add a disability rider to a life insurance policy, you should know:

  • You cannot purchase a disability rider if you are over the age of 65.
  • You cannot purchase a disability rider if you have pre-existing conditions.
  • There is a waiting period of up to 6 months before the waiver kicks in.

Do You Need A Disability Rider?hundred dollar bill puzzle

If you are deciding whether a disability rider is right for you, you should consider what kind of job you have, and how much you and your family rely on your income. For example, if you have a high-risk job where there is a higher likelihood of injury, a disability rider will be very beneficial to you, and will give you peace of mind knowing that you’ll be prepared in the face of the unexpected. In addition, one of these riders could be perfect for you if you are the sole breadwinner of your family.

When looking into a disability rider, you’ll find that they differ between life insurance companies: some insurance companies have different definitions of disability, as well as different coverage options for these riders. Before purchasing a life insurance policy with a disability rider, you should compare plans from different companies to find the one that suits you and your family’s needs best. To do this, consider using online tools, or speaking with an agent. We have provided the top insurance companies that offer life insurance policies below; each can give you hassle-free assistance and the most competitive rates in the nation. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.