Insurance can be a confusing process. Here is a basic understanding of some of the terminology often used in the insurance world.
Attending Physician Statement
A report by a doctor or medical facility that has treated you. During the underwriting process, the insurance company will often ask for an APS to either verify the state of your health or get more background about a medical issue.
The amount of money you receive each month in the event you are unable to work due to a disability. The benefit of an individual policy usually isn’t taxed, unless you paid for it with pre-tax dollars. If you have a group plan paid in part by your employer, the benefit may be taxable
The length of time you can receive benefits under the terms of the policy. For a short-term disability policy this will typically not be more than a year; for a long-term disability policy the benefit period could range from two years (less common) to retirement (age 65, 67 or Social Security normal retirement age), or until you recover from your disability.
Disability benefits are never automatic – you need to file a disability claim showing proof of disability in order to begin the process and determine if you are eligible for benefits.
An umbrella term for any or all the monetary and other benefits (e.g., rehabilitation) you may be eligible for under the terms of the disability policy. In other words, what you are buying when you purchase a policy.
An insurance plan that pays some of a person's income when he or she is disabled from an illness or injury and cannot work
Also called a waiting period. This is the period of time you have to wait after you are disabled until you may start receiving benefits. It’ll generally be shorter for an STD policy, and longer for an LTD policy.
A common provision that states that the insurance company will renew a policy at the end of each term up to a specified age or date as long as the premiums pare paid. The insurer may make changes in the premium rates.
Partial Benefit (or residual)
A partial benefit or residual allows you to qualify for benefits when a disability isn’t a total disability, but rather when sickness or injury prevents you from working full-time in your occupation.
Partial disability is a category of disability used for disability insurance. It is defined as any type of disability in which the worker is not completely disabled but is unable to perform at full physical capacity for work. The disability is usually due to illness or an on the job injury
A pre-existing condition (e.g., heart disease or cancer) you had before getting your policy. Many, but not all pre-existing conditions can be excluded from disability coverage or may result in the individual paying a higher premium
The amount you pay for your policy. Your premium amount will vary based on the type of disability coverage, the benefit amount, benefit period, your health, and the optional provisions or riders included in your policy contract.
Policy provisions that typically enhance your coverage, for example, a cost-of-living adjustment rider that increases your benefit to account for inflation. Riders usually come at an added cost to your policy but can provide important added value.
The process in which the insurance company looks at all your medical records and other information then determines if they will issue you a policy and the cost of your policy based on the risks involved
Also called an elimination period. This is the period of time you have to wait after you are disabled until you can start receiving benefits. It will generally be shorter for an STD policy, and longer for an LTD policy