Wednesday, 24 August 2016

A Common Gap in Disability Insurance Policy

If you take a close look at what disability insurance stands for, it is clear to see that it is an amazing policy for employees. Not only does it protect the business and business owners, it also helps bears the risk of the employees. As benevolent as this policy may seem, there are also some gaps that arise in the policy. If not properly understood, these gaps could cause a devastating effect on the employee.

Disabilityinsurance pays a part of the salary of employees to them if they are involved in work related injuries. This means as long as they are away from work, they still get to receive a portion of the salary. What most people don’t realize is the fact that a part of your salary may not really be significant to cater for your needs. The policy could pay as high as 60% of your salary but this would only be meaningful if your salary is large.

The policy also doesn’t include bonuses and commissions. So if you get more in commissions and bonuses, you should not expect the policy to pay your any part from. To give a better illustration, let’s imagine you receive an annual salary of $10,000 and commissions of $50,000. The disability insurance is able to pay as high as 60% of your $10,000 but never the $50,000. So if you have expenses calculated with both the $10,000 and $50,000, the 60% would not be enough. To fill this gap, it is advised to take up additional disability coverage; just in case.

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