This type of disability insurance not only protects your income, but will also preserve your ability to contribute to your retirement savings.
How Does Retirement Protection Disability Insurance Work?
If you become disabled, this type of insurance will kick in and begin making payments to a trust fund. These benefits gain interest over time, and at the end of the benefit period, you will receive the money. The process is similar to the way you would contribute a portion of your income to a personal retirement account or 401k, but instead of that money coming out of pocket, it comes from your insurance policy.
The benefit period for this type of policy typically lasts until the insured reaches age 65 or 67, at which point they can access the money in the retirement fund. If the insured recovers from his or her disability before this point, the payments will stop, and he or she can continue making independent contributions to a retirement fund.
Retirement Disability Riders
Like traditional disability policies, retirement contributions disability insurance policies can also be enhanced with riders. Some possible riders include the cost-of-living-adjustment rider, which accommodates cost of living in the benefit amount, and the future increase rider, which allows you to increase the benefit amount when you are earning a higher salary.
How Do I Qualify?
In order to quality, the applicant must be between the ages of 18 and 60 years old. Like in many other cases, premiums will be lower if you purchase a policy while you are young with no health issues. To benefit the most from this kind of coverage, you will likely need to have already purchased maximum coverage from your traditional disability insurance. Additionally, some companies require that you make a certain amount of income to qualify for a policy.
If you would like to learn more about retirement protection disability insurance, you can speak with an advisor to receive more direct feedback regarding your specific circumstances—click here to send us a message.
