DISABILITY INCOME PROTECTION
Today, most people understand the significance of life insurance in their personal, family, and business lives. What most don't recognize, however, is that statistics show that the chance of becoming disabled and unable to earn a living is much greater than the chance of dying.
And yet, how many of us think about the consequences of being unable to earn a conventional income? For example: When your income ceases, who will pay your home loan and other bills? Will your income decrease while expenses rise, causing even more significant debt exposure? How many weeks or months will your company pay your sick leave? Will you have enough financial savings to deal with your expenses until you are fully recovered from disability and can return to work?
Disability Income Protection Insurance
Trusted Union can help with the right plan that begins working when you can't.
Disability Income Protection would be your ideal choice. It insures you against the chance of income loss if you can't work due to illness or injury resulting from an accident. Under an income protection plan, if you become totally disabled, the insurer will pay you a monthly benefit of up to 70% of your monthly income to help you and your family cover your expenses. The following describes some of the features and benefits included in a Disability Income Protection Plan:
Total Disability benefit
A monthly disability benefit will be paid to you after you become completely disabled. Completely disabled means during the first two years of disability because of illness or injury resulting from an accident, you are unable to conduct each duty of your own occupation. After the first two years, if you are unable to perform any occupation for which you are realistically suited to because of education, training or experience. When you take out your disability income policy, you can choose the monthly total disability benefit amount to suit your needs, up to 70% of your normal monthly income. The total disability benefit is payable to you for as long as you continue to be totally disabled and until the benefit period ends.
Your Choice of Benefit Periods
The benefit period is the maximum time period that the company will pay benefits for disability due to illness. Which is usually up to age of 65. As a special feature of your Disability Income Protection (DPP), the company provides a lifetime benefit period if your total disability is the result of an injury caused by an accident.
Your Choice of Waiting Periods
Once your claim is filed, your insurer will begin paying out your monthly benefit after your selected waiting period has expired. Available waiting periods are 30, 60, 90, and 180 days. The longer your waiting period is, the lower your cost of insurance will be.
The partial disability benefit helps you get back on your feet again. If, after collecting a total disability benefit for 14 or more days, you partially recuperate and go back to work at a decreased capacity, the insurer will pay you a partial disability benefit rather than the total disability benefit. Your partial disability benefit is a percentage equal to the reduction in your earnings at a decreased capacity.
Since your cost of living typically goes up every year, your insurance benefit can increase as well. With the Disability Income Protection Plan, the monthly benefit you are paid as a result of total or partial disability will be adjusted each year to reflect the change in the Consumer Price Index during the previous 12 months, up to a maximum of six percent.
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Disability Income Insurance FAQ
Why is disability income insurance important?
When you fall ill or are the victim of a serious accident, the most important thing is to focus on your recovery. But beyond the immediate health concerns, there are serious long-term financial implications to consider as well.
If you become seriously ill or disabled, you may not be able to work for some time. If that happens, what would the financial impact be for you and your family?
Disability income insurance is important because if you were to become unable to work due to sickness or injury, disability income insurance would pay you a monthly benefit to help ease some of your financial burden so you can focus on recovery.
What is the purpose of disability income insurance?
The purpose of disability income insurance in Hong Kong is to replace your income if you become disabled (aka. unable to work) due to illness or injury.
Although you may think it won’t happen to you, there are many reasons why you might benefit from a disability income policy. Some examples of situations where disability income insurance would help include:
1. A computer programmer or office worker gets carpal tunnel syndrome making it difficult or impossible to continue their computer-based work
2. You contract a serious illness like cancer and have to take time off work to recover.
In all of the above situations (and more), disability income insurance will pay you a monthly benefit to help offset your loss of income and help you and your family maintain the same lifestyle during your period of disability.
How much does disability income insurance pay?
In this event of partial or permanent inability to work, disability income insurance is designed to pay up to 70% of your annual salary. This sum is reduced by any other benefits you’re getting such as social security, EC Ordinance, or other insurance policies.
It’s also important to talk about waiting periods. Your disability has to be longer than 180 days before the policy will pay any lost income. If that’s not a good fit for you and you want a bit more protection, you can choose a waiting period of between 30, 60, 90 or 180 days.
Who should get disability income insurance protection in Hong Kong?
You should consider getting disability income insurance in Hong Kong if you are concerned about your ability to maintain your current quality of life if you are unable to continue performing your work duties.
People who should pay extra attention to this type of insurance are people with specialized knowledge or skills or those working in particularly hazardous occupations.
What types of disability income insurance are there?
With disability income insurance in Hong Kong, there are a lot of different options you can choose to customize your level of coverage.
The first thing to consider is how long you want the coverage to last. If you become disabled under the definition of the policy, it can cover you 2 years or all the way until age 65 (the retirement age) if you remain totally disabled. Of course, the longer the period of coverage, the more expensive your insurance will be.
The second thing to consider is the definition of disability under your policy. This is important because your policy will trigger when the conditions for “disability” have been met. There are generally 2 definitions of disability to choose from:
Own Occupation: with an own occupation policy, the insurance company would consider you disabled and coverage would be triggered if you are unable to perform the duties of your own occupation. But this is only for 2 years; after that, coverage stops if you’re able to work in a gainful occupation (an occupation you’re reasonably suited for based on experience, training and education).
Any Occupation: with this kind of policy, coverage would be triggered if you are disabled to the point where you cannot work in any occupation.
As you can probably surmise, an own occupation policy is much more expensive than an own occupation policy because it activates more readily.
For example, if you were a computer programmer and got carpal tunnel syndrome, an own occupation policy would consider that a disability and begin paying out. If you had purchased an any occupation policy, the insurance company would not consider you disabled because even though you can’t type, there are other occupations or jobs you can take.
No one policy is right for everyone. There is no one-size-fits-all solution. To learn more about which option is best for your unique situation, contact a Trusted Union Disability Income Insurance expert in Hong Kong for a free consultation.
Are there any geographical restrictions for Disability Income Insurance?
The short answer is yes. You’ll still have coverage but benefits for disability are reduced by 50% while you’re living in any place other than North America, Europe, Australia, New Zealand, Japan, Singapore, Hong Kong, and Macau.
What is the difference between Total and Partial Disability?
Total Disability means the continuous inability to do any of the following things due to injury or sickness:
1. During the first 2 years of the disability, perform every duty of your occupation
2. After 2 years, be unable to perform any gainful occupation (one that you’re reasonably suited for based on your education, training, or experience).
Partial Disability means suffering a reduction in monthly earnings if:
1. During the first 2 years since you became totally disabled, you regained the ability to perform some but not all of the duties of your occupation.
2. After 2 years since the start of your total disability, still be unable to work at a gainful occupation.
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