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Disability Insurance

Disability Insurance Overview


Disability insurance also referred to as “disability income insurance,” safeguards workers from the threats of lost income that can be the consequence of becoming disabled and unable to work as a result.

What it does

This insurance can compensate some or even all of a person’s salary if he or she finds themselves in a position where they can no longer work due to injury, sickness, a physical impairment, or due to a covered psychological disorder as well. Shockingly, almost a quarter of workers suffer the effects of being disabled during their working lives. Workers can utilize this coverage if they suffer a debilitating injury while working or if they contact an illness or even become injured that is from a cause unrelated to their job, like cancer for instance. Payouts from disability income insurance can be exploited for one’s house or car payments, food, utilities, and other living costs.

Who benefits

Often employers will include good disability income insurance as part of their packages offered to their employees, but workers can also obtain this coverage from private insurance providers. Private disability income insurance usually will handle around 70 percent of a worker’s lost income. When buying this insurance privately, a worker will usually need to provide pertinent information, such as their age, their job description, income, and any existing health issues. The insurance rates then vary depending on this information and the resulting computed likelihood of the potential policyholder becoming disabled.

How it works

One usually pays premiums on either a monthly or annual basis. Disability insurance is often quite costly with some workers paying out thousands of dollars per annum. For those with especially risky jobs or who have existing health problems, the expense of the coverage will likely still worth it should the possible lost income one becoming disabled is factored in.
One can choose between two different kinds of disability insurance. There is short-term disability coverage or long-term policies. Short-term policies will vary with the worker’s individual plan characteristics, but generally will last between a few months to a full year. It can pay out income for a worker who suffers a short-term disability but has no remaining sick leave. Long term disability policies also vary but instead can protect a worker for a year or more, all the way up to the entire remaining life of the worker. Some long-term disability policies can cover a policyholder until they turn a certain age, but keep in mind that workers generally have the freedom to choose their preferred kind of coverage specifics that reflect their personal state of affairs and desires.