What is disability insurance?

Disability insurance is a form of insurance created to cover a percentage of a policy holder’s wages should they become unable to work due to illness or injury, and unlike with worker compensation plans individuals with disability insurance are covered for disabilities that happen both at work and at home. The money paid out is calculated either as a set dollar amount or as percentage of the holder’s wages, and each policy will outline when disability payments will commence, how long they will continue, and when they will end. Payments can vary depending on whether the disability has been caused by accident or health-related problems, and premiums can differ based upon the length of time the policy covers, and the amount that will be paid out.

Long term disability insurance provides coverage that can last for a set number of years or until the beneficiary reaches the age 65, replacing part of the income that would have been earned had the policy holder been able to continue working until retirement. Long term disability insurance premiums can vary based on the amount of coverage required and the length of time the holder will receive benefits.

Who needs disability insurance?

It’s common practice for people to insure their cars, houses, and other material possessions. Unfortunately, many of these same people neglect to insure their most valuable asset—their continuing ability to work and earn an income to support themselves and their loved ones. In fact, according to a recent survey by the National Association of Insurance Commissioners, 56 per cent of U.S. adults say they would be unable to pay their bills or cover their expenses if they were disabled and unable to work for a year or more.

The reality is that proper disability coverage is just as important as life insurance because advances in medical technology mean the likelihood of becoming disabled due to accident or illness are now greater than the odds of death. The Council for Disability Awareness reports that almost 3,000 Americans become disabled each hour, and almost one third of those entering the workforce today will become disabled before they reach retirement.

Additionally, a recent study through Harvard Medical School found that medical problems contributed to almost half of all bankruptcies nationwide. If an individual relies upon his or her salary to pay bills and maintain their current lifestyle, disability insurance is an excellent way to protect themselves and their family from serious debt and financial struggle.

Learn more about disability insurance plans.