Disability insurance-Definitions and Types

Most people refer to disability insurance as disability income (DI) insurance.

Whichever way, they both answer to the same need.

The disability insurance shields monetary lack from the disabled.

Every day, people get disabled in different ways and lose their source of income.

A disability may occur due to exposure to harmful substances or the environment from work.

Other times, disabilities happen because of illness or accident.

Be as it may, you do not need to go broke because of no fault of yours.

So, perhaps you got disabled from your job or illness and probably can not go back because of a disability. 

This type of insurance will get you covered and may become a source of income for you.

Again, you may decide to go for your disability insurance but do not know how it works.

This article will give you a stepping stone on how you can begin.

While at it, let us explain what disability insurance is, first.

What is disability insurance?

Disability insurance acts like coverage for you against losing your source of income to disability.

It is another type of insurance that protects you from income loss if you qualify. 

Though you may not be working again, your source of income will still be intact.

By the way, this type of insurance has some strict rules that are attached to it.

And when you become eligible, you will have to wait a while before you start receiving your income.

Moreover, your disability insurance benefits depend on your policy.

How does disability insurance work?

Firstly, you can purchase your disability insurance through private sellers, through a public route, or from your employer.

READ Also:  Health insurance- Definition, Types, and Benefits

Supposed you are employed in a company that offers this coverage, you can decide to use this benefit or purchase extra coverage for yourself.

Now, say you bought this coverage for yourself, the amount you earned as an income before your disability and the amount you pay as a premium decides on the percentage you will start getting after a disability.

Also, some coverage lasts for a period while other types of coverage last longer.

For clarity, there is short-term disability coverage as well as long-term disability coverage.

The American government has a disability benefit for the citizens through social security.

Types of disability insurance

Disability insurance comes in different forms, and they serve the policyholders in separate ways. 

Perhaps, you need to buy this coverage, you should know what suits you best.

Short-term disability coverage

this coverage kicks in immediately after your disability happens. 

It does not matter if you become disabled through accident or an illness.

Rest assured, your coverage begins to pay you your benefits immediately.

Meanwhile, some employers offer short-term disability coverage to their employees.

Individual coverage

This coverage comes as a personal intentional decision. In other words, the coverage belongs to people that didn’t receive any disability coverage from their workplace. 

And those that earn a high income. So, they buy this coverage as an extra layer of protection for themselves. 

Even when they leave or switch jobs, their coverage stays with them.

Long-term coverage

Long-term disability coverage pays the policyholder for a longer time.

Most times, it kicks in after the short-term version runs out.

READ Also:  Bundling Home and Auto Insurance

Employers offer this coverage to their workers sometimes.

Supplemental coverage

Like the name, it supplements your individual or long-term coverage.

Employees who want to add to the coverage they’ve got from work can purchase supplemental disability coverage.

Group coverage

Employers offer group coverage as benefits to their workers and pay for all the premiums.

At times, employees may not get this privilege but can use the employer’s broker to purchase the coverage at a subsidized rate.

Social security disability insurance

Some terms and conditions are guiding this coverage.

The major rule states that you must have worked long enough before you can benefit.

More so, your social security taxes must be up to date. 

Supplementary security income

Adults and children with disability are the beneficiaries of this government-owned program.

Which disability insurance can a self-employed use?

The choicest disability coverage that can cover a self-employed person is individual disability coverage.

You can not get one from an employer because you employed yourself and runs your business.

How much is the cost for disability coverage?

Anybody that earns an income can buy coverage. This coverage is a necessity that has the power to protect your income.

As it stands, the cost of this coverage is dependent on some factors.

These include your medical history, type of coverage, age, and premiums.

How to apply for the disability program

First, you must correctly fill out the disability form you will receive.

Submit your form. Your information will decide if you passed the disability threshold.

Your work history will go through an evaluation.

READ Also:  Cheapest Travel Insurance Companies

The state agency will finally determine if you qualify for benefits.

What are social security disability insurance benefits?

Social security disability insurance benefits are payments you receive as a disabled from the government.

These funds get to everyone involved through the Social Security Administration.

This money does not only get to the disabled alone but to some of their family members.

But the criteria for this is that you must have worked long enough on your job.

Also, you stopped your job because of the disability and are certified not fit to work. And you’ve not worked for 12 months at least.

Coverage pros and cons

This coverage has some highs and lows to it. So, wisely weigh your options before you use any of them.

Pros

  • Cover your income against loss from disability
  • There are options of coverage to pick from
  • Kicks off immediately
  • Give peace of mind

Cons

  • May disqualify you
  • Has short-term periods
  • Has strict regulations and criteria
  • Can keep you waiting for a long time

In conclusion, disability insurance has become everyone’s concern. Both your employer, yourself, and the government.

These avenues sees to it that everyone’s income is covered against income loss in the event of a disability.

Leave a Reply