Disability Insurance Policy
This particular type of insurance helps provide financial support if one becomes injured and is unable to work for certain periods of time.
What It Is
Insurance that covers disability, also referred to as health and accident insurance, is designed to provide the policy holder with a percentage of his or her income in the event that an injury or condition will cause an inability to work for an extended period of time. These policies can be offered by employers or they can be purchased by individuals, similar to purchasing healthcare coverage. This insurance should not be confused with Social Security disability or Worker’s Compensation. It is coverage that must be purchased, while Social Security provides its own benefits through the government and Worker’s Compensation is covered by your employer and is primarily used for the medical treatment of injuries that occur while you are at work.
How It Works
When you have decided that this insurance is what you need, you will first need to shop around and find the best prices. Do not be fooled by inexpensive costs. You must understand that there are different terms available that affect the price. Not all policies will be the same. For example, the percentage of your income paid out can range from 45 to 60 percent. You could also find waiting periods that range between 30 to 90 days before benefits kick in. Once you become disabled, you must submit documentation that proves your disability and the estimated time you must be out of work.
Types of Coverage
There are two main types of coverage available. Disability insurance can be either short term or long term. Short term coverage generally provides a shorter waiting period of about 7 to 14 days, but it will only pay out benefits for about three to six months. On the other hand, long term policies are designed to pay out for a longer period, even if the waiting period is longer. This particular type can provide benefits for years or until you reach retirement age. In many cases, both policies are purchased. The short term coverage helps provide benefits while waiting for the long term coverage to take effect and is automatically terminated once it does begin.
Disability insurance exists to help people avoid complete financial ruin from a disability or disabling condition.