Disability Insurance Basics
Your job ensures your livelihood. It provides for you and your family, pays the bills, heats and cools your home, and puts food on the table. Even if you are single, your income affects nearly every aspect of your lifestyle. Without it, your savings and your ability to pay for necessary life expenses can evaporate and leave you facing very tough decisions.
Every year, thousands of workers face this situation when an illness, injury, or some other unforeseen event forces them to leave their jobs. Without help, this sudden loss of income can often be devastating. Luckily, though, when situations like these occur, disability insurance is there to help.
What Is Disability Insurance?
Disability insurance is a plan to protect you and your family from hardships. In the event that you are injured or become ill and are no longer able to work. Disability insurance is your financial parachute. In the event that you become disabled – either permanently or temporarily – disability insurance can supplement a certain amount of your lost income.
Should I Have Disability Insurance?
Everyone who relies on his or her own income should consider the support of disability insurance.
How Does Disability Insurance Work?
Unlike life insurance, disability insurance secures financial stability during your lifetime. Should the unexpected happen and you become disabled, disability insurance could prevent you from falling behind on your bills.
How much support you will receive from disability insurance varies depending upon a number of factors, the most important of which is the length of time you will be in need. There are two distinct types of disability insurance:
Short-Term Disability
Short-term disability insurance policies are commonly provided by employers and can last anywhere from a few weeks to several years. Short-term disability policies are designed with two purposes in mind:
- To supplement income after employment leave is exhausted.
- To provide benefits during the waiting period of a long-term policy.
A few facts about short-term disability insurance:
- In the event of short-term disability, the waiting period stated on your policy will determine when you will receive your benefits.
- The waiting period for a short-term disability policy is generally very short. Some policies have no waiting period at all and begin to provide benefits immediately.
- Your policy will determine the amount of your benefits, often a percentage of your original income.
Long-Term Disability
Long-term disability policies are less likely to be provided with your employee benefits since they are designed to supplement income for an extended period of time. Should you ever become permanently ill or disabled, a long-term disability policy will provide you with the income you can no longer earn.
Some long-term disability policies will provide you with benefits from the time you become disabled until you reach 65 years of age, as long as your premiums are paid in full and on time.
Preventative measures like purchasing a long-term disability insurance plan could mean years of comfort and support in the event that you are ever permanently injured. Consider using this information as your springboard to learning more about these potential benefits. For more information, talk with your employer or health insurance provider about your disability insurance options.