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DISABILITY INSURANCE FAQ
What is disability insurance?
The purpose of disability insurance is to replace the lost income from work should you become disabled, and unable to work. The disability insurance policy will stipulate when you are eligible to begin receiving benefits. Usually, you must be unable to work for a specified amount of time before disability benefits begin to be paid to you. The amount of the payments, the duration of coverage, and a description of exactly what constitutes a disability are contained in the policy.
How is a disability defined?
The definition of the disability will be outlined in your policy and may vary between companies. That definition will determine the circumstances under which you will be able to receive payments, and possibly whether you may be able to go into some other line of work while still drawing on your disability benefits.
Who should purchase disability insurance?
Anyone who works for an income should consider disability income insurance. First, check to see what disability insurance you already have. You may be covered under group disability, income continuation, Social Security Disability, workers compensation, or other plans. State-sponsored disability insurance plans are also available in several states (including California, Rhode Island, New Jersey, New York, Hawaii and Puerto Rico).
What does disability insurance cover?
After an initial period called the “elimination” or “waiting” period, disability income insurance pays a specified percentage of your income while you are disabled. The payments continue for the duration of the disability or until the maximum time limit stipulated in the policy. As a rule, insurance companies will not allow you to have disability coverage for more than about 60 percent or 70 percent of your normal taxable income.
Is disability insurance difficult to obtain?
It depends on how you define difficult. Generally, if you are in reasonably good health and have a steady income, you should be able to purchase a disability income policy.
Does my occupation or the type of work I do have a bearing on my eligibility?
Yes. If your occupation places you at great risk of injury (parachute tester, for example) or illness (say, an asbestos remover) you can expect to pay more — or even be ineligible — for disability insurance.
Are partial disabilities typically covered?
Some disability policies have a provision for partial disability. Whether or not your disability policy covers partial disability depends on the details of the specific policy. If the policy covers partial disability, it will probably pay a portion of the full payment until you can resume all of your regular job duties.
I was working in my garage when I suffered an accidental injury. Will I qualify for disability?
Yes. Since it was accidental, you qualify — even though it was your fault. If it was intentionally self-inflicted, and not an accident, you’d usually be unable to collect.