Disability insurance covers workers’ salaries when they are injured and unable to work, or become disabled due to a long-term illness. The purpose of disability insurance for
individuals is to help them recover some or all of their lost income due to their injury or illness.
Disability insurance typically is defined as short-term or long-term. Short-term disability is any loss of income of six months or less. Long-term disability is for terms longer than six months, and can include lifetime disability coverage depending on the insurance contract terms. When looking at short or long-term disability, check into additional coverage and terms that help protect your insurance income. These can include cost-of-living adjustments (COLA) to reduce the effects of inflation, guaranteed renewal terms, and refunding of payments if the insured party makes no claims during the policy term.
Social Security covers persons of a specific age or older, but two disadvantages are that most people eligible for Social Security are already retired, and there is a cap regardless of their previous income. Disability insurance will cover the majority of a person’s salary regardless of their age, providing gap coverage before the injured employee would be eligible for Social Security.
Many employees depend on their employer’s disability insurance, but they should investigate their available
employee coverages. They may find there is less coverage than the income they lose due to an injury or illness. It becomes even more important to look at disability insurance if your employer doesn’t offer it. Take the time to investigate the coverage offered by your employer, than take action to fill any gap with private disability insurance to protect your family.
The cost of disability insurance depends on several factors:
- The employee’s income
- Their occupation
- The results of a health assessment
- Lifestyle choices, such as tobacco or alcohol use
- The level of benefits desired
- Other policy options such as COLA or guaranteed renewals
If you have pre-existing health conditions or work at a hazardous job at the time you apply, your premiums will be higher than someone in perfect health or in a low-risk job. You will need to weigh that cost against a potential loss of income or even your home if you become disabled and cannot keep up with expenses.
The Insurance Hub will be happy to discuss your personal situation and your need for disability insurance or a wide range of other insurance products.
Contact us today for a consultation.