Disability Insurance

In many cases, an injury causes serious financial strain when the injured party cannot work. Wages are lost, which leads to a domino effect as bills and living expenses accumulate. Disability insurance can help. It can help prevent this problem by providing a portion of wages that would be earned during the time a covered person is injured.

Disability coverage is a type of insurance policy that pays the policyholder a percentage of the wages that would be earned. It is usually included as workplace benefits provided by employers. If an employer does not offer this insurance, it can be purchased individually. There are two forms of disability coverage.

Short-term disability coverage is designed for injuries or illnesses expected to cause a work absence of six months or less. The covered party must use all available sick days before benefits can take effect. Initially, a small lump sum may be paid but following that, the injured person will receive regular payments. These payments are usually about 60 percent of the party’s income and can occur weekly, biweekly, or monthly depending on the terms outlined in the policy.

Long-term disability works similar to its short-term alternative, but it is designed to provide benefits to covered individuals who will be disabled for more than six months. Similar to short-term coverage, there is a waiting period for benefits, ranging from one to twenty-four months. The average period is about 90 days. During this time of waiting, the injured party can use available paid leave, including sick and personal days, along with short-term disability benefits.

Disability insurance is recommended for anyone who relies on their income to survive, either as a sole source of income or as an important secondary income. Not everyone has enough savings or retirement funds accrued to get through an injury or severe illness.