Disability Insurance

What you should Know About Disability Insurance

If you become sick or get injured to the point that you can’t go to work, disability insurance ensures that you have an income to take care of your loved ones, especially if you are the sole breadwinner.

How It Works

This kind of a policy replaces the whole or a certain percentage of your income, say 60-70 percent, if a medical condition renders you inactive. Some employers provide disability perks as a part of employee benefits. As an employee of such a company, if you get injured or fall sick and can’t go to work for some time, your coverage will keep up with your earnings, or at least part of it until you get back to work. Typically, the amount you get will depend on what is agreed upon on your contract. Disability coverage provides for your family when you are not able to because of sickness or injury. You can also use it to cover the gaps in your health insurance.

Types of Disability Coverage

There are two types of disability insurance. They are categorized depending on the amount of time they provide benefits to the insured party. These are short term disability and long term disability. Short-term disability provides coverage for a limited amount of time, usually not exceeding six months. This type of coverage works best with mild illnesses and not so severe injuries. The premiums are lower and easy to get coverage; the insurer won’t probably ask for your health records to review your medical history.

Long term disability, on the other hand, provides coverage for an extended period. This coverage can even provide benefits for a lifetime. Long-term disability is, however, harder to purchase. You will be required to provide a medical history, and the premiums will be much higher. Disability coverage is a good choice for sole breadwinners with dependents.

Besides long term and short term, a disability coverage can be non-concealable or guarantee renewable. Non-concealable means that the policy cannot be canceled or altered in any way unless the insured faults premium payments. Guaranteed renewable means that the insured has the right to renew the coverage with no changes in coverage, but the insurer can increase premiums provided they also increase the rates of other people in the same pool.