What is Disability Insurance?
Disability Insurance, often called DI or disability income insurance, or income protection, is a form of insurance that insures the beneficiary's earned income against the risk that a disability creates a barrier for a worker to complete the core functions of their work.
For example, the worker may suffer from an inability to maintain composure in the case of psychological disorders or an injury, illness or condition that causes physical impairment or incapacity to work. It encompasses paid sick leave, short-term disability benefits (STD), and long-term disability benefits (LTD).
Statistics show that in the US a disabling accident occurs on average once every second. In fact, Nearly 18.5% of Americans are currently living with a Disability, and 1 out of every 4 persons in the US workforce will suffer a disabling injury before retirement.
Disability Income Insurance
Disability Income insurance protects you in the case of loss of income. If you lose your ability to work, either from temporary or permanent disability, a disability claim can be made.
There are many different elements that make up a disability income insurance policy so it is important to understand when and how you will receive the disability income if the need arises. For example, you will need to know how your policy defines and covers short and long-term disability and total disabilities.
In addition, it is important to know if there is a waiting period for the income to kick-in and how or if the income from the disability income insurance policy will affect Social Security, workmen's compensation or unemployment benefits. There are also different types of policies to consider such as choosing a short or long-term policy period. Another key element to look for when choosing a policy is knowing if it covers disabilities from both accidents and illnesses.
Are you thinking that social security would cover you?
Think again. The benefits are limited. To determine your Social Security disability benefits and learn more about benefit eligibility visit www.ssa.gov/disability.
Types of Disability Insurance
Individual Disability Insurance - Those whose employers do not provide benefits, and self-employed individuals who desire disability coverage, may purchase policies. Premiums and available benefits for individual coverage vary considerably between companies, occupations, states and countries. In general, premiums are higher for policies that provide more monthly benefits, offer benefits for longer periods of time, and start payments of benefits more quickly following a disability claim. Premiums also tend to be higher for policies that define disability in broader terms, meaning the policy would pay benefits in a wider variety of circumstances.
High-limit Disability Insurance - High-limit disability insurance is designed to keep individual disability benefits at 65% of income regardless of income level. Coverage is typically issued supplemental to standard coverage. With high-limit disability insurance, benefits can be anywhere from an additional $2,000 to $100,000 per month. Single policy issue and participation (individual or group long-term disability) coverage has gone up to $30,000 with some companies.
Key-person Disability Insurance - Key Person Disability Insurance provides benefits to protect a company from financial hardship that may result from the loss of a key employee due to disability. The company can use the benefits to hire a temporary employee should the disabled employee's disability appear to be short-term. In the case of permanent disability, benefits are used to help defray costs related to hiring a replacement, including recruitment, training, startup, loss in revenue and unfunded salary continuation costs.
Business Overhead Expense Disability Insurance - Business Overhead Expense (BOE) coverage reimburses a business for overhead expenses should the owner experience a disability. Eligible benefits include: rent or mortgage payments, utilities, leasing costs, laundry/maintenance, accounting/billing and collection service fees, business insurance premiums, employee salaries, employee benefits, property tax, and other regular monthly expenses.
Contact us to learn more about the disability insurance coverage for you.
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