Not all disabilities are clear cut. These disabilities fall into the kind of, sort of category.
Partial disability usually means that a person cannot work part-time due to the disability. Residual disability usually means that there is income loss, but you are still working full-time. Most disability insurance companies will blend partial and residual disability definitions to come to a decision on a case-by-case basis.
How much benefit?
How much disability income a policyholder will receive is based on the insurance company’s maximum issue limit and the insurers maximum participation limit. The issue limit is the amount of benefit the insurer will issue, and the participation limit is the amount they will cover in conjunction with another disability policy in-force.
Example: Say you need $10,000 a month to live. One disability insurance policy that you have has an issue limit of $5000 a month. Another disability policy that you own has an $8000 a month issue limit. The first policy will pay you $2000 a month, not $5000, based on the participation limit spelled out in the first policy.
If an individual needs more than $10,000 a month to live they can likely buy additional disability coverage through an excess disability carrier. Excess coverage is offered through specialty markets and any disability broker can assist.
How long?
Maximum disability benefits can range from 2 years to age 65 depending on the policy chosen. There are hybrid disability policies as well.
How much coverage?
As a rule of thumb your disability benefit amount should reflect about 2/3 of your income. The benefit period should also be as long as possible. Yes, the odds are low that you will suffer a life-changing disability, but who wants to be the one that chose not to obtain the maximum benefit period when it was available to them at time of application?
The disability contract
The more control you have over a contract and price guarantees the more expensive it will be. A three-year non-cancellable contract offers more protection than a policy with a 30-day cancellation clause.
Due diligence is the name of the game. Find a trustworthy broker that will take the time to discuss the disability policy in detail. Price is important of course, but many factors should take precedents over premium alone.