Disability insurance insures the beneficiary’s earned income against the risk that disability will make working (and therefore earning) impossible. It includes paid sick leave, short-term disability benefits, and long-term disability benefits. Disability insurance can provide you with financial security by replacing a portion of your earnings when an accident or illness causes you to become disabled and unable to work for a fixed period of time. Accidents and illnesses are a fact of life and could happen to anyone at any time. Did you know that:
- 1 in 3 people, on average, will be disabled for 90 days or longer at least once before age 65.
- The average length of a disability that lasts over 90 days is 2.9 years.
Both personal and business disability insurance solutions are available that offer flexibility and features to help bridge the gap between income and expenses during a disability. Policies can be designed to include components that insure short-term disability claims and move into longer term coverage in the event that a disability leave is extended.
Employer-Supplied Disability Insurance
Since one of the top reasons for becoming disabled is getting hurt on the job, it is not surprising that the second-most important form of disability insurance is that provided by employers to cover their employees. There are several subtypes that may or may not be separate parts of the benefits package: workers’ compensation and more general (but very basic) disability insurance policies.
Individual Disability Insurance Policies
Those whose employers do not provide benefits, and self-employed individuals who desire disability coverage, may purchase their own policies on the open market. Premiums and available benefits for individual coverage vary considerably between different companies, for individuals in different occupations. In general, premiums are higher for policies that provided more monthly benefit, pay the benefit for a longer period of time, and start payments for benefits more quickly following a disability. 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.