Disability Income Insurance

What if I am disabled and can't work?

If you are disabled or unable to work as a result of an accident or illness, disability income insurance, which complements health insurance, can replace lost income. There are basically three ways to replace income:

   1. Employer-paid disability insurance
   2. Social Security disability benefits
   3. Individual disability income insurance policies

 

How can I save money on disability coverage?

There are two ways to keep the cost of disability insurance down:

How are disability premiums determined?

Disability premiums are based on your age, sex, occupation and the amount of potential lost income you are trying to protect.

In general, the lower the chance that your occupation puts you in harm’s way, the lower the premium. The higher the chance of injury, the bigger the premium. So, for instance, an accountant working in an office would have much lower disability premiums than a construction worker.

How can I purchase disability insurance?

Talk to the agent who sells you your life, health, auto or business insurance—he or she may either sell disability coverage or will be able to refer you to an agent who does.

Your state's insurance department will also have names of agents and companies writing policies in your state.

Make sure that you understand what you are buying and don’t be afraid to ask your agent to explain exactly what is in the policy.
 

What are the types of disability insurance?

There are two types of disability policies: Short-Term Disability (STD) and Long-Term Disability (LTD):

  1. Short-Term Disability policies - have a waiting period of 0 to 14 days with a maximum benefit period of no longer than two years.
  2. Long-Term Disability policies - have a waiting period of several weeks to several months with a maximum benefit period ranging from a few years to the rest of your life.

 

Disability policies have two different protection features that are important to understand:

How can I insure against loss of income?

If you were disabled and unable to work as a result of an accident or illness, what would you and your family do for income?

Disability income insurance, which complements health insurance, can replace lost income. Forty-three percent of all people age 40 will have a long-term (lasting 90 days or more) disability event by age 65.

There are three basic ways to replace income:

Will my employer provide disability coverage?

Most employers offer some kind of disability insurance, but you should find out exactly what your employer offers before you have to file a claim. Most allow some short-term sick leave, which might last from a few days to as much as six months. Five states and Puerto Rico have Temporary Disability Insurance (TDI) programs to provide income support to individuals who are out of work because of a non-work-related illness or injury.

Buying disability insurance

Talk to the agent who sells you your life, health, auto or business insurance—he or she may either sell disability coverage or will be able to refer you to an agent who does.

Your state's insurance department will also have names of agents and companies writing policies in your state.

Make sure that you understand what you are buying and don’t be afraid to ask your agent to explain exactly what is in the policy.