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Disability Insurance

While health insurance will pay most of your medical bills from an injury or illness, it won’t help you if you can’t work. In that case, you need to have disability insurance if you want to replace your income.

What is it?

Disability coverage is a type of insurance that aims to replace some of your income if you can’t work because of an injury or other medical reason. The coverage often is offered as part of a voluntary benefits package in your workplace, and many companies pay some or all of the premiums. Policies typically replace about one-half to two-thirds of your normal income.

Who is it for?

Anyone can benefit from having disability coverage, but there are some individuals for whom a policy may be vitally important. People who rely solely on their own earned income or whose income is the sole support of other family members should have disability insurance. It’s also a good idea for people who have jobs requiring physical labor where even a relatively minor injury or illness could put them out of work for a significant amount of time.

How does it work?

Generally, to file a claim on your disability coverage you have to have a doctor’s opinion that your illness or injury is disabling, as well as an estimate of how long the disability is expected to last. Depending on the policy, you may have a waiting period before benefits kick in, and you will probably have to first use up any paid leave you have available at your job. Your insurer will likely require you to visit a doctor regularly to recertify your disability.

Types of policies

There are two main types of disability policies: short-term and long-term. Short-term policies usually cover you anywhere from a few weeks to a few months. Long-term disability policies are meant to provide an income if you are likely to be disabled for at least six months and can last until the length of disability qualifies you for government benefits.

Major benefits

The main benefit of disability coverage is replacing some of your income if you are unable to work because of an illness or injury. Recuperating from an illness or injury can be challenging enough, but worrying about how to pay your mortgage or rent and put food on the table on top of it doesn’t aid recovery. And expensive medical bills with an inability to work can result in financial difficulties that may last for years. Disability insurance can be a true lifesaver for many families.