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11 Disability Insurance Questions (and Answers) | Asteya

6 min

You might think that if a potential customer approaches your insurance agency about disability insurance, they’re ready to sign on the dotted line and get their policy started. But that’s usually not the case. 

It’s important to remember that insurance is intimidating to people who aren’t experts like you. So, there’s a good chance that people are going to have (at least) a few questions they want answers to before taking out a policy.  

As an insurance broker, knowing how to answer those questions accurately is a big part of your job. But, how can you make sure you’re ready to confidently answer any questions you’re asked? We’re breaking down some of the most commonly-asked questions so you can give your customers the information they need—in a way that doesn’t mamke their eyes glaze over.  

Client question: “What exactly is disability insurance?” 

 

The straightforward answer: Disability insurance protects your income if you ever find yourself unable to work for more than three months due to illness or injury. That’s why you might also have heard it called income insurance—because it replaces the income that you would have received during the time that you’re off work.  

You can choose between two types of policies: long-term and short-term. Short-term disability insurance generally covers temporary conditions like maternity leave and pregnancy costs or planned surgeries that take a few weeks to recover from. As you might guess from the name, long-term policies are best for covering health problems that span a longer time period or could leave you permanently disabled. 

If you find yourself in a situation where you’re unable to work due to a medical condition, you’ll make a claim against your disability insurance policy and receive regular payouts that you can use to pay your home or medical bills until you get back on your feet. 

Client question: “Why do I need disability insurance?” 

 

The straightforward answer: One in four people will have had to take at least a year off work due to an unexpected illness or injury by the time they retire. It might be hard to believe, but the statistics don’t lie. And that’s just long term disabilities. Another 5% will experience a short term problem that keeps them out of work for up to six months. 

Simply put, disability insurance is a financial safety net that can relieve the worry of keeping a roof over your head or food on the table. That’s the last thing you want to be thinking about when you’re trying to recover and get back to work. Even if your employer offers some kind of disability insurance, they’re usually only short term policies or very limited long term options that won’t sufficiently cover your expenses. 

Taking out disability insurance is even more important if you’re the only source of income in your household, especially if you’re providing for a family and not just yourself. They depend on the money you earn, so what happens if you’re suddenly faced with an unexpected medical issue and can’t do your normal job? Relying on savings alone, if you even have any, will only get you so far. 

Particularly if you’re young, taking out income insurance as early as possible can really benefit you. You’re likely making the least amount of money that you will at any point in your career. That means there’s less to insure and your policy costs will be lower.  

You might also have a large amount of student loan debt. And those bills aren’t going to stop coming in each month just because you’re at home and recovering from a health problem. With disability insurance, you can take care of those repayments while you’re not earning money from your job. 

Client question: “What disabilities are covered?” 

 

The straightforward answer: While every disability insurance policy is different, most standard medical issues will be covered. Always read the small print and ask us, your insurance agents, to confirm what is and isn’t included. 

Generally speaking, policies will cover cancer, fractures, musculoskeletal disorders, pregnancy, and mental health issues. There are exceptions though, mainly for pre-existing conditions. This is any illness or injury that you had before you started your policy.  

For example, if you were already pregnant before your policy began, any costs related to that pregnancy would not be covered. You’ll still be able to get coverage for other conditions and future pregnancies, but not the current one. 

Client question: “How much of my income can I replace with insurance?” 

 

The straightforward answer: To protect insurers from scams, most policies will never replace more than 60-80% of your take-home income.  

Even if you took out disability insurance with multiple providers, you must disclose existing policies when you sign up for a new one so that you aren’t able to accumulate a 100% income replacement across different providers. 

Client question: “How long will I receive insurance payouts for?” 

 

The straightforward answer: Depending on your policy terms, you could receive benefits from two years to retirement. It all depends on how long you’re out of work for. The longer your coverage, the more you’ll pay to have the policy (otherwise known as the premium amount).  

Most insurance policies come with a waiting or elimination period, which is the time that you’ll have to wait for payouts to begin arriving in your bank account. This can be anywhere from a couple of weeks to several months after you become disabled. That’s why it’s always best to have some savings or a short term insurance policy to cover this time period. 

When you work with an insurance agency, we’ll provide you with several quotes from different providers and outline exactly what the terms of the policy are. This includes any waiting periods and how long you can expect to receive payments from the insurer should you make a claim. 

Client question: “Do I have to pay taxes on my insurance payouts?” 

 

The straightforward answer: The good news is that, since you’re paying for a private disability insurance policy with after-tax dollars, any payouts that you receive will be tax-free 

That means every single penny will go straight into your pocket and can be used to cover all of your daily expenses. 

Client question: “Will I get payouts from both my private insurance policy and Social Security Disability Insurance?” 

 

The straightforward answer: You are able to collect any Social Security Disability Insurance (SSDI) benefits while also receiving payouts from your private income insurance.  

However, there’s a catch. You still can’t receive more than 80% of your after-tax income from any of your benefits. If that happens, your SSDI benefits will be reduced until you hit that 80% limit. 

Client question: “Can I work and still receive benefits?”

 

The straightforward answer: It depends. Not every illness or injury will prevent you from working in some capacity, but it may stop you from doing the job that you had before your medical condition. This is why your insurance agent will provide you with a choice in income insurance policy, as some allow you to keep receiving payouts while you work in another occupation. 

Own occupation insurance is the type that will give you the most coverage. This kind of policy allows you to claim your full benefits, even if you choose to work somewhere else. With another type called any occupation insurance, though, your disability means that you can’t do any job at all. You won’t be able to receive benefits if you take up another job, whether it’s in the same industry as before or not. 

Client question: “How much will my income insurance policy cost?” 

 

The straightforward answer: Your annual or monthly policy premiums will depend on a variety of factors including the type of and length of the policy, your age, any pre-existing conditions, your occupation, and even certain lifestyle choices. 

For most people, a long term disability insurance policy will be 1% to 6% of their annual income. That will typically increase each year as you get older and the likelihood of you making a claim goes up. 

Client question: “How does an agent fit into the insurance buying process?” 

 

The straightforward answer: Think of an insurance agent as the middleman between you and an insurance company. We work with several providers at any one time, which means we can help you to find the best solution for your personal needs and budget. 

We also know that buying disability insurance is often a complicated and confusing process. There’s new jargon that you might not understand, especially when it comes to terms and coverage options. You definitely don’t want to spend money on a policy that isn’t actually covering what you want because you didn’t understand what you were signing up for.  

That’s where an agent can help. We’ll explain everything in easy-to-understand terms, answer all of your burning questions, compare policies with you, and even help you make a claim or changes later down the road if you need them. 

Client question: “How long does it take to become insured?” 

 

The straightforward answer: With most insurers, there’s a process known as underwriting that can take several weeks to complete. This is where the provider will go through all of your information and decide whether or not they want to insure you. You’ll usually have to provide some medical information too, which can take another few weeks to get from your doctor. 

To streamline the process, we also offer policies from Asteya. Asteya’s “no exam” disability insurance means that you can bypass these requirements entirely. With no doctor’s exam or blood tests to complete, you can get coverage as quickly as possible. You’ll fill out a questionnaire and Asteya will take it from there. Their fast approval process means that you’ll be covered against unexpected medical problems in no time. 

Empower your agency’s customers with information 

There’s no way to know exactly what your insurance agency’s customers might ask you. But, regardless of what question you find yourself answering, make sure to provide information in the simplest way possible.  

Your customers are working with you because you’re the expert—so you don’t want to overwhelm them with complex policy language and jargon that they ultimately don’t need to know. 

Use these common questions and straightforward answers as your guide, and you’ll be ready to give your customers the information they need to make the best insurance decision for them (with no snoring or eye-glazing involved).  

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