What is Disability Insurance?
“The Social Security and Supplemental Security Income disability programs are the largest of several federal programs that provide assistance to people with disabilities. While these two programs are different in many ways, they are both administered by the Social Security Administration and only people who have a disability and meet the medical criteria can qualify for benefits under any of the programs.”
– Social Security website, June 2006
The Social Security office will want to check your medical history to make sure you qualify for disability benefits. The Social Security office is one way to get disability benefits, but in most cases these benefits will not be substantial enough for families.
Disability insurance can be obtained through any number of insurance companies. In the event that you are disabled, this insurance will serve as your financial protection. You will receive a percentage of your gross income from your disability insurance policy, income that will guarantee your own financial security.
It is not necessary to go through Social Security to contract disability insurance, nor to receive the benefits of said insurance. The Social Security disability program is not related to any disability insurance you purchase.
“Individual disability insurance is truly a basic concept. It is an insurance product designed to replace between 45% and 60% of your gross income tax-free in the event that illness prevents you from earning an income in your occupation. Every insurance company’s disability insurance policy is very different, this is not a product to simply shop for the most competitive rate.Buying the cheapest disability insurance policy on the market is a waste of money.Odds that you will pay a monthly benefit under a cheap contract can be significantly lower than receiving benefits from a quality contract.
– About the Disability Insurance Website, June 2006
Types of disability insurance
Most people are familiar with two types of disability insurance: short-term disability and long-term disability. Short-term disability insurance is included as part of a benefits package with many different employers and typically provides income on the first part of disability. Short-term disability insurance typically provides coverage for a period of several weeks and not to exceed a period of two years.
However, long-term disability can last for several years. These types of policies can be included as part of employment, in a benefits package, but many purchase these disability insurance policies individually.
However, when it comes to disability insurance, there are still more policies to learn about. One type of disability insurance is Self-Occupation Disability Insurance. The definition of this policy reads:
“Inability to perform the material and substantial duties of your regular occupation, the insurance company will consider your occupation to be the occupation you were performing at the time you became disabled, they will pay the claim even if you are working in some other capacity.”
Another type of disability insurance is Income Replacement Insurance. This is a very popular type of disability insurance and most insurance agents are familiar with this policy. The language of this type of disability insurance says:
“Due to illness or injury, you are unable to perform the material and substantial duties of your occupation, and you are not engaged in any other occupation.”
Common in employee benefit packages, gainful occupation coverage is another popular form of disability insurance. The language here is very carefully worded:
“Because of illness or injury, you are unable to perform the material and substantial tasks or your occupation, or any occupation for which you are reasonably qualified by education, training, or experience.”