Question: What factors influence the cost of disability insurance?

Sprague: There are six factors that insurance companies use to determine rates:

• the amount of the benefit
• the length of the waiting period, called an "elimination period" before you begin to receive benefits
• the length of the benefit period itself
• the definition of the types of disability the policy will cover
• your current health status, medical history, and lifestyle factors that influence your health and safety
• the type of the contract itself: whether it is non-cancellable, guaranteed renewable, or optionally renewable

Question: How much disability insurance do I need?

Sprague: That depends entirely on your financial circumstances. A reasonable goal is to ensure that you have enough money to live on from the time you become disabled until you return to work or begin to receive income from another source such as retirement or social security. So you need to consider what resources you have that could see you through a sustained period of lost income: Does your spouse make enough to cover all the family expenses? Do you have investments that provide sufficient income to live on? Do you have assets such as real estate or jewelry that could be sold to produce cash? The sad truth is that many people lose their homes in foreclosures and about half of all bankruptcies are filed after people lose their income due to a disability.

Of course, it is important to consider the cost of insurance along with the risks, and to buy insurance at a level you can comfortably afford.

Question: Will I need to take a physical exam in order to get disability insurance?

Sprague: Yes. Generally, the exams are brief and include standard procedures such as height, weight, blood and urine specimens, and questions about your medical history.

Question: Are all types of disabilities covered?

Sprague: Not necessarily. Insurance companies differ in the types of disabilities they cover, and the policies they offer include definitions of these. We recommend that you work with one of our skilled insurance professionals to determine the coverage that best suits your particular needs. If you already have a group disability policy, you need to review it with your agent to discuss what it covers and what gaps you may want to fill with additional individual policies.