There are many types of insurance policies available today. After all, insurance is an incredibly important investment for guarding against the unexpected. One policy that often doesn’t get enough attention is disability insurance. In fact, you may find yourself asking, “What is disability insurance?” The reality is that this type of policy is critical for protecting individuals throughout their lifetime. 

Disability Insurance 

As you might guess, disability insurance protects someone from being financially impacted by a disability. It’s a form of income insurance that ensures a stream of income in the event that someone is unable to work. 

Let’s say that you get into a car accident caused by another driver. It results in a major spinal injury that prevents you from returning to work for several months. Disability insurance would provide you with continued income in that situation. This income may cover anything from medical bills to normal living expenses. 

This insurance often comes in short- and long-term policies. Short-term policies may only provide benefits for up to 2 years, while long-term benefits kick in after that and may last for a few years or until the end of the insured individual’s life. 

How Does Disability Insurance Work? 

Like any type of insurance, the policyholder pays a monthly premium to the insurance company in exchange for the coverage. The policy will spell out the benefits and the conditions that need to be met for them to apply. 

Typically, disability insurance will provide a portion of your income prior to becoming disabled. This often amounts to between 60% and 80% of your income. Another thing to consider when evaluating different policies is the length of the payouts. Depending on the policy, you may receive benefits for a certain number of months, years, or even until a specific age. 

These policies may come from employers or the Social Security Administration, or directly from an insurance company. Worker’s compensation insurance is also a form of government-mandated disability insurance. While added coverage often isn’t required, many employers offer it as part of their annual benefits packages. Sometimes, employees may pay policy premiums through payroll deductions. 

Do I Need Additional Coverage?  

Every individual’s needs are different. That said, disabilities are more common than you may imagine. In fact, research shows that up to 1 in 4 people will experience a disabling event before reaching retirement age. 

When we think of disabilities, we typically think of major accidents. Unfortunately, this is only one reason why people purchase a policy. Most disabling conditions associate with medical conditions. Conditions such as heart disease, stroke, cancer, arthritis, and depression can often lead to someone being unable to work for a brief period or even for the rest of their lives. 

Employer-provided insurance may not be enough to cover your needs in the event of a disability. In this case, supplemental coverage through a private insurance company can bridge this gap. This also applies to small business owners and the self-employed who cannot claim workers’ compensation for themselves. 

We always recommend that those in high-risk industries consider disability insurance. Such industries include drilling, mining, construction, automotive, agriculture, and manufacturing. Individuals who also engage in risky activities like extreme sports may need special coverage, as a standard disability policy oftentimes won’t cover injuries from these hobbies.  

Disability insurance can be a touchy subject for many. If you have concerns about it, feel free to contact us for more details. Our staff are always happy to answer all your questions and give you greater peace of mind. We’re here to help you find the policy that best meets your unique needs.