Disability Income Insurance is a form of health insurance that pays you monthly benefits when unable to work because of illness or injury based on the contractual terms of the policy.
Total disability occurs when the insured is unable to perform any of the duties associated with their occupation, or any occupation they may be qualified to do. Loss of any two limbs, total and permanent blindness, loss of speech and hearing and loss of level earnings are presumptive disabilities and automatically qualify the insured for total disability whether or not they can work. Under a total disability, the insured receives 100% of the benefit agreed to in the policy’s contract.
Partial disability results when the insured is able to perform some, but not all, of the duties required by their occupation. If partially disabled, the insured usually receives up to 50% of the contracted benefits.
A residual disability is similar to a partial disability but is more concerned with loss of earnings rather than physical limitations of the disability. Under residual disability the insured’s income must be reduced by at least 15-20% due to an inability to perform some duties required by the occupation.
A recurrent disability is when the insured is unable to work due to causes related to the same previous disability and has not worked for more than six months continuously. Recurrences can be treated as new claims and subject to an elimination period (the time between when the disability occurred and when eligibility begins).
Disabilities can be permanent or temporary. Permanent disabilities reduce or eliminate the insured’s ability to work for the remainder of their life. Temporary disabilities occur when the insured is unable to work for a period of time but a full recovery is anticipated.
Benefit amounts, length of coverage and premium payments vary depending on the type of plan. There are two main types of disability plans: Short Term and Long Term. Short Term Disability normally lasts for six months and no more than a year. Long Term Disability plans can range from 2-5 years or up to age 65 or 70 with an elimination period from 0 to 180 days. Benefits become payable after satisfying the elimination period. Both types of plans pay a percentage of the insured’s compensation as defined by the policy.
To learn more about Disability Income Insurance and whether its the good choice for protecting your family in the event of permanent or temporary disability, please contact Seward Insurance.