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You've probably purchased life insurance or at least considered buying it, especially if you have dependents. But statistically speaking, you're less likely to die during your working years than to suffer some sort of long-term disability. In fact, some studies show that one in five people will be disabled for at least 90 days or longer before they reach age 65.

For most people the ability to earn a living is their greatest asset, and losing that ability can have a devastating impact. In fact, one survey of bankruptcy filers found that one in four attributed their dire circumstances to a disability.

So it makes sense to consider long-term disability insurance. Here are three questions to ask when shopping for this type of policy:

1. What coverage do I already have? Many companies provide their employees with some type of sick leave benefits, short-term disability coverage, or both. Get a handle on your current coverage so you don't end up paying for more insurance than you need. Also, if you've accumulated several weeks or months of sick leave, a policy with a longer waiting period — and generally cheaper premiums — may make sense.
   
   
2. How strong is the insurer? Only a handful of major insurers provide individual long-term disability policies. To research the financial strength and reputation of any potential insurer, review the firm's rating information at Moody's or another rating agency. You can also find out whether an individual agent or company is properly licensed by contacting your state insurance department.
   
   
3. Is the policy "noncancelable" or "guaranteed renewable"? These terms indicate whether the policy's terms are subject to change. If a policy is "noncancelable," the company can't cancel your policy (except for failure to pay the premiums), and you can renew the policy without an increase in the premiums or a reduction of benefits. On the other hand, a "guaranteed renewable" policy allows the insurer to increase the premiums under certain conditions.

Many other components — waiting periods, inflation provisions, benefit amounts, definitions of "disability," age, health and occupation — factor into the cost and benefits of a particular policy. So understanding the ins and outs of long-term disability insurance isn't always a cake walk. But with a little time and effort you can sort through the jargon and find a policy that makes sense for you.

If you need help, give us a call.