• any immediate needs at the time of death, such as final illness expenses, burial costs and estate taxes;
• funds for a readjustment period, to finance a move or to provide time for family members to find a job
• ongoing financial needs, such as monthly bills and expenses, day-care costs, college tuition or retirement.

1. What happens if I fail to make the required payments?

If you miss a premium payment, you typically have a 30- or 31-day grace period during which you can pay the premium. After that, the policy will lapse. You may be able to reinstate with evidence of insurability depending on your policy's provisions. If your policy has sufficient cash value, the company can, with your authorization, draw from a permanent policy's cash surrender value to keep that policy in force. This does not apply to term insurance because there is no cash value to draw from. In some flexible premium policies, premiums may be reduced or skipped as long as sufficient cash values remain in the policy. However, this will result in lower cash values.

2. What if I become disabled?

Provisions or riders that provide additional benefits can often be added to a policy. One such rider is a waiver of premium for disability. With this rider, if you become totally disabled for a specified period of time, you do not have to pay premiums for the duration of the disability.

3. Are other riders available? (*availability and specifics of these riders vary by carrier and state.)

• "Accidental death benefit", provides for an additional benefit in case of death as a result of an accident.
• "Accelerated benefits", also known as "living benefits." This rider allows you, under certain circumstances, to receive the proceeds of your life insurance policy before you die. Such circumstances include terminal or catastrophic illness, the need for long-term care or confinement to a nursing home.
• "Child rider", provides insurance for all your children, usually from $1,000 to $20,000 of death benefit.

4. When will the policy be in effect?

If you decide to purchase the policy, find out when the insurance becomes effective. This could be different from the date the company issues the policy.

5. How do accelerated death benefits work?

It allows policyholders to receive all or part of the policy's proceeds prior to death under certain circumstances, including the need for long-term care and confinement to a nursing home. Because payments may affect tax status and Medicare eligibility, and will be deducted from the overall benefits paid later to beneficiaries, policyholders should thoroughly investigate options in advance.

6. By using medical tests are insurers trying to eliminate any applicant likely to develop a serious health condition?

Medical tests can provide accurate and current information about an applicant's health, thus enabling insurers to charge premiums that reflect the level of risk an applicant represents. Because some health conditions are easily managed through proper medication, therapy or lifestyle changes, medical information sometimes makes it possible for insurers to cover applicants who might not otherwise be insurable. More serious or incurable conditions present an enormous risk that an insurer simply cannot assume.

7. What should I consider in naming life insurance beneficiaries?

• Always name a "contingent," or secondary, beneficiary, just in case you outlive your first beneficiary.
• Select a specific beneficiary, rather than having the proceeds of your life insurance paid to your estate. One of the great advantages of life insurance is that it can be paid to your family immediately. If it is payable to your estate, however, it will have to go through probate with the rest of your assets.
• Be very clear in wording beneficiary designations. Naming specific children may exclude those born later. If your child dies before you, do you want the proceeds to go to that child's children? Changing the beneficiary designation is easy, but you have to remember to do it.

8. Does it make sense to replace a policy

Think twice before you do, because in many situations it may not be to your advantage. Before dropping any in-force policy, make sure your "new" policy is paid for and in effect and first consider:

• If your health status has changed over the years, you may no longer be insurable at preferred or standard rates.
• Even if both policies pay "dividends," it may be years before the new policy's dividends equal those of your present one.
• If you replace one cash-value policy with another, the cash value of the new policy may be relatively small for several years and may never be as large as that of the original one. There may also be a period wherein a surrender charge is applicable on the first policy.
• You should ask for a detailed listing of cost breakdowns of both policies, including premiums, cash surrender value and death benefits. Compare these as well as the features offered by both policies.
• If you decide to surrender or reduce the value of the policy you now own and replace it with other insurance, be sure your new policy is in force before you cancel the old one.

9. As a single person, do I need insurance?

The answer almost always is yes. You may want to consider these options:

• Disability income insurance - especially important for self-supporting singles without sizable assets, this can replace a good part of the income you would lose if you were unable to work because of accident or illness. If you don't have long-term disability coverage at work, it would be wise to consider an individual policy designed to replace at least 60 percent of your income.
• Health insurance - if you don't have on-the-job coverage, an individual policy is your first line of defense against ever-escalating medical and hospital costs. You can keep premium costs down by electing a large deductible, thereby "self-insuring" as much as you can afford.
• Life insurance - even if you have no dependents now, you may later. If you buy now when you are younger and healthier, you an "lock in" lowest-cost coverage, including guaranteed insurability.

• That results from attempted suicide or intentionally self-inflicted injury;
• That results from voluntary participation in a felony, attempted felony, or illegal occupation;
• That results from a sickness or injury for which benefits are provided under any state or federal worker's compensation law;
• Provided outside the United States or Canada;
• Provided in a government facility (unless otherwise required by law);
• Provided for the treatment of alcoholism or drug addiction, or in facilities operated primarily for such treatment;
• Provided in facilities operated primarily for the treatment of mental or nervous disorders or disease, other than Alzheimer's disease or dementia.

• Alzheimer's Disease;
• Severe Arthritis with functional limitations;
• Diabetes which is not under control;
• Cancer within the past 6 months;
• Parkenson's Disease;
• Stroke within the past 6 months;
• A Stroke at any time, which has caused functional limitations;
• Congestive Heart Failure within the past 6 months;
• Emphysema, if severe or still smoking;
• Chronic Obstructive Pulmonary Disease, if severe or still smoking;
• Any conditions which require the assistance of another human being for the basic activities of daily living: bathing, eating, toileting, or transferring in and out of a bed or chair

• Each year 12% of the adult population suffer a long term disability.
• 1 out of every 7 workers will suffer a five-year or longer disability before reaching age 65.
• At age 32 your chances of suffering a three-month or longer disability is 6 times more likely than death
• At age 35 your chances of suffering a three-month or longer disability is 50%
• At age 45 your chances of suffering a three-month or longer disability is 44%
• On average 7 out of 10 claims for Social Security disability benefits are refused the first time requested.

• If you pay the premium the benefits are normally received free from income tax, if the premiums are paid by an employer, the benefits are taxable as ordinary income.

• Elimination Period - It is the period of time the insured must wait after becoming disabled to receive benefits. Typical waiting periods are 30, 60, 90,120,180, and 360 days. The longer the elimination period the less expensive the policy.
• Benefit Period - It is the period of time the benefits will be paid following the elimination period. The benefit period could be from 2 years to age 65 to lifetime. The longer the benefit period the more expensive the policy.
• The Amount of Benefit - The larger the pay-out the more expensive the policy. The benefit will not normally exceed 70% of income.
• Residual Benefit - Percentage of benefit paid if you return to work and are still partially disabled and cannot return to work full time or cannot earn your full income.
• Own-Occupation - Pays a benefit if you are unable to return to your present occupation but can work doing something else. For example, a doctor who is a surgeon, cannot return to surgery but can teach. This is the most expensive type of disability policy.
• Reasonable or Any Occupation - Pays a benefit while disabled, but stops when you are able to return to work at a job that matches your education and experience. This policy is less expensive than an Own-Occupation policy.
• Occupation - Occupation is a factor used in determining rates. For example, a doctor's rate would be much lower than a blue-collar worker.
• Guaranteed Renewable - Guaranteed Renewable policies cannot be cancelled by the insurance company even if a change in the insured's circumstances would make him or her a greater risk. Plus, the insurance company cannot make any changes to the provisions of the policy, or add restrictions. When purchasing an individual disability policy it should be Guaranteed Renewable.
• Non-Cancelable - Guarantees future premiums will not be increased. When purchasing an individual policy it should be Non-Cancelable.
• Presumptive Disability - Presumptive disability means that you are considered total disabled and eligible for benefits for the loss of sight in both eyes or the loss of two limbs. The better contracts also presume total disability for the loss of hearing in both ears, loss of the power of speech, or the loss of the use of two limbs.

• Protection Against Inflation - A benefit that can be added that offers a cost-of-living adjustment for inflation during a long-term claim.
• Automatic Increase Rider - Automatically increases monthly benefits for a specified period of time. A typical increase is 5% compound.
• Future Increase Options - Allows the insured to purchase additional benefit amounts without proof of insurability.
• Capital Sum Benefit - Pays the insured a lump sum benefit up to 12 times the monthly benefit if the insured loses the sight of one eye with no possibility of recovery or has a hand or foot severed. This benefit is paid in addition to the other benefits.
• Rehabilitation Benefit - To help a disabled insured return to work, this benefit will pay some of the expenses incurred when the insured enrolls in an approved rehabilitation center. This benefit is paid in addition to the other benefits.
• Transplant & Cosmetic Surgery Benefit - Under this benefit, any disability arising from donating a transplant organ, improving your appearance or correcting a disfigurement will be covered by the policy.

• Social Security does not just provide for retirement income but disability income as well. However, more than 70% of the applicants who apply, fail to get coverage the first time they apply. You can get an estimate of what your benefit might be by going to the Social Security web site.
• In 1992, the average monthly payment for a disabled worker was $642; the average monthly payment for a family of a disabled worker was $1093.
• Eligibility is based on being unable to perform any gainful employment.
• You are eligible for benefits after you have been disabled for 5 months and if the disability is expected to last 12 months.
• 85% of Social Security disability payments are subject to federal income tax if your income exceeds $34,000 individually or $44,000 jointly.

Most employers are required to provide this coverage. The amount and duration varies by state. Workers Compensation only pays if the disability occurs on the job, and usually lasts for only a few years and the payments are low.

For individual policies, the applicant needs to qualify and go through an underwriting process, similar to the process required for life insurance. The applicant could be subject to a higher premium or even be declined based on his or her occupation, medical history, or lifestyle. Individual policies are usually purchased by high income professionals because of the cost.

Some states require employers to carry group disability insurance anywhere from 26 to 52 weeks.

Group LTD is carried by almost half of mid-size to large employers and provides long term benefits for at least 5 years covering about 60% of salary. The premium is usually very low, does not require proof of insurability, and often is fully paid by the employer.

• A monthly fee, called a premium.
• A certain amount of money each year, known as the deductible, before the insurance payments begin. In a typical plan, the deductible might be $250 for each person in your family, with a family deductible of $500 when at least two people in the family have reached the individual deductible. The deductible requirement applies each year of the policy. Also, not all health expenses you have count toward your deductible. Only those covered by the policy do. You need to check the insurance policy to find out which ones are covered.
• After you have paid your deductible amount for the year, you share the bill with the insurance company. For example, you might pay 20 percent while the insurer pays 80 percent. Your portion is called coinsurance.