Unlike workers compensation, disability income insurance supplements your income even in cases where the illness or injury is not job-related.
What is it?
Disability insurance provides benefits that replace part of your lost income when you become unable to work due to illness or injury. If you become injured or ill and can no longer work, disability insurance generally does not fully replace your income during your disability; it only replaces a portion of your income. Unlike workers compensation, disability income insurance supplements your income even in cases where the illness or injury is not job-related.
How Does it Work?
You are considered partially disabled if your disability prevents you from performing one or more, but not all, essential tasks of employment or occupation, reduces the percentage of time or specified number of hours you are able to work, or causes a reduction in compensation. Each policy is different and you should check the definitions of total and partial disability within a policy before buying it. You should also determine whether the policy pays benefits for disabilities resulting from both accidental injury and illness.
Buying Disability Insurance
Disability policies usually include a waiting period that specifies the number of days you must be disabled before qualifying for benefits. Waiting periods can range from 90 days to 365 days before benefits are available. These policies will also specify the length of time you will receive monthly income replacement benefits. Benefit periods can range from 1 year, 2 years or 5 years up to age 65. Read the policy carefully to understand waiting and benefit periods. If you become disabled, the insurance company will review your income history to determine your disability income benefit. The benefit may be stated as a dollar amount or as a percentage of your income.
Before You Buy
Many disability income policies offer additional benefits that you can buy. These can include:
How Do I Apply?
Most companies require you to complete an application and provide personal information, including your medical history. It is important that you disclose all conditions and answer all questions completely to assure you have coverage when it is time to submit a claim.
Companies frequently request medical records and may require you to take a physical exam or have blood tests. If you have serious or chronic health conditions, you may be charged a higher premium for coverage or you may be unable to qualify for individual disability income insurance coverage.