Disability Insurance, sometimes called income protection or disability income, is an important type of insurance that covers the entire extent of a beneficiary’s earned income, against the risk that an untimely disability creates a total barrier to complete flow of life’s activities. Disability Insurance provides both medical and other benefits to those who are unable to earn money on their own due to a disability that prevents them from working. The policy pays a specific amount periodically, to a named beneficiary. This is usually a fixed income, subject to income taxes and benefit limits. It can also be a supplemental retirement income plan similar to 401(k) plans.
How Does Disability Insurance Work? When a person becomes disabled, his or her income may temporarily become low as a result of that disability. Often, when a person becomes disabled, he or she is unable to continue earning cash income on a regular basis. Some disability insurance companies provide training sessions to new disabled-worker applicants to help them understand the complicated procedures involved in disability insurance application and the expected monthly benefit amount. Other disability insurance companies allow the new beneficiary to choose how much of the monthly benefit amount to invest, so long as that amount does not exceed the maximum cash surrender value Doctors disability insurance.
Who Is Eligible? People generally eligible for benefits include: people who have reached the legal age and the maximum age for retirement according to state law; people who are legally blind and have impaired vision; people who are permanently or semi-permanently disabled, according to standard health evaluation standards; and pregnant women. People who are awarded benefits are not required to continue paying into the policy. However, they must wait until the policy matures and then begin receiving payments. If the insured neglects to pay for the policy, it will lapse, and all accumulated benefits will be forfeited.
How Does Disability Insurance Work? There are two primary methods of providing disability insurance: as group coverage and as individual policies. Group coverage generally provides more affordable monthly benefits. Individual policies are less expensive but don’t provide the flexibility of working at a company. However, group coverage can be less expensive if purchased through an employer, because employers generally offer a good portion of the benefits.
Who’s Eligible? Disability insurance protects employees who are unable to earn money during regular working hours because of illness, injury, or training. If an employee cannot earn an income because of an injury that limits his ability to earn money, the insurance pays to make up the difference. For example, a construction worker who earns $200 per week because he has a disability that causes him to require weekly injections may be covered by a private company’s group policy. Similarly, a cook who is prevented from earning money because of a heart ailment can be protected under a family health insurance policy.
What Are the Disabilities? A typical disability insurance policy will pay a percentage, normally 25%, of the employee’s past wages for each month during which he does not earn income and is unable to work. Other disabilities may pay a higher percentage; for example, long term sickness or an injury that prevents a person from working for a period of time. Conditions that fall under these categories include: Cancer, AIDS, epilepsy, diabetes, migraine, meningitis, stroke, alcoholism, and other diseases that affect the brain or spinal cord.