What Does Disability Insurance Actually Do?

There are so many types of insurance coverage and the disability insurance coverage is one of them. However, it is among the least used coverages. Most people do not know what it is all about and for this reason, most do not bother to take up this particular policy.

The disability insurance coverage is a form of insurance that insures the beneficiary’s income against disability. In the event of an accident or illness that leaves the beneficiary disabled, that is they cannot perform their duties at work, the insurance coverage will provide a source of income to them.

It is possible to confuse the disability insurance package with the worker’ compensation insurance. These two are, however, very different. The workers’ compensation package will provide benefits in the event the employee gets hurt while on the job. The disability insurance package will provide benefits should the employee not be able to work due to a disability.

Types of Disability Insurance

Disability insurance is divided into two main types; short-term and long-term insurance.

  • Short-term disability insurance- Depending on what plan you have, a short-term disability insurance can pay benefits for 9- 52 weeks. Usually, there may be a waiting period of around two weeks after disability. During this period, employees may use sick time for their compensation.
  • Long-term disability insurance- Once the short-term disability period wears off, the insured starts benefitting from the long-term disability insurance. Long-term insurance will go on until the disability ends or for a specified number of years. There’s also the option of the insured receiving the benefits till they reach a certain age. All plans are different. However, most plans will pay out around 60% of the base salary.

Just like any other insurance coverage, the amount of premiums that you pay will vary depending on a couple of factors. Ideally, the price range for a disability insurance coverage will be around 1% to 2% of the annual income. The following factors will, however, affect the cost of your coverage:

  • Age and health- If you are older and have more health issues, then you will pay more premiums as compared to younger and healthier people.
  • Gender- Because women tend to make claims more than men, most insurance companies will have them pay more premiums.
  • Occupation- Some jobs have a higher risk of sustaining injuries. People who have such jobs will generally pay more.
  • Income- The more the income, the more premiums you will have to pay. This is because you are looking to insure against a larger sum as compared to a low-income earner.

There is so much more to know about the disability insurance coverage. If you would like to get more information on the coverage and get someone to help you get your own policy, give us a call at 844-540-0463 and speak to one of our agents.

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