When you have huge investments, such as a family home, it’s important to take the steps to financially protect yourself and your family. Disability insurance can protect you from any loss of income you may face due to an accident, injury, or sudden disability.
You may want to consider purchasing disability insurance if:
- your family depends on your income
- you have a high-risk job (eg. construction worker)
- you don’t have an emergency fund for medical bills or other unexpected expenses
Affordable and Convenient Mortgage Life Disability Insurance in Calgary
At 20/20, we provide mortgage life disability insurance that is affordable, easy to qualify for, and flexible to help you protect your loved ones and keep them financially stable even during times of difficulties.
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MORTGAGE LIFE DISABILITY INSURANCE
Disability Insurance: Everything You Need to Know About Offsets
When you purchase disability insurance, your policy will often pay you in one of two ways: either a set amount each month, or a percentage of the income you were earning before becoming injured or disabled.
If your policy pays a percentage of your income, then the insurance company will most likely ‘offset’ from your payout any money that you receive from other sources such as:
- workers compensation
- state disability insurance
- social security disability insurance
- social security retirement benefits
Why does this happen? The reason for this offset is that your coverage is ensuring that you receive only the equivalent of your pre-disability income from all sources. This allows your insurance company to pay you less money in the event that you’re receiving payments from other sources.
How to Plan For Disability Insurance Offsets
There is generally nothing you can do to get rid of the offsets in your disability insurance policy. If you’re receiving the benefit through your employer, the terms have already been negotiated between your employer and the insurance company. If you’re receiving benefits through a private policy, you can try to negotiate with your insurer, but they’re unlikely to yield.
While the intent behind these offsets makes sense, when you’re out on a claim, every dollar counts. Here are some things you can do to plan for your disability insurance offsets:
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Buy-up: If you have the option, it makes sense to buy-up to a higher percentage of disability benefit payments. For example, if your plan pays 50% of your pre-disability income, and you have the choice to buy up to 70% or 80%, it makes financial sense to do so.
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It’s best to purchase private disability insurance. If you can afford to purchase private disability insurance that isn’t tied to your employment, then you should. Such policies often don’t have the same offsets and can provide greater legal protection in the event that you become injured or suddenly disabled.
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Make sure to review your policy. It’s crucial to understand what other sources your plan offsets. Once you know this, apply for all your applicable benefits. While it’s frustrating when your insurance company reduces your benefit based on other sources, it’s infinitely worse if they reduce it based on what you could be receiving, had you actually applied.
Call Today
To find out more about our transparent, flexible, and affordable mortgage life disability insurance, and how we can help protect you and your family in times of difficulty, call today at 1-844-974-2020 or fill in our online contact form.
