Disability Insurance Articles

Types Of Disabilities That Will Qualify For Insurance

2010-07-30

Disability insurance is insurance that will preserve your income in the case that you become incapacitated due to injury, disease, or other types of disabilities that physically prevent you from earning an income. At age 65, you will become eligible for Social Security Disability benefits, but until then you're on your own. It's a significant risk: statistics say that 30% of Americans will become disabled before retirement. When buying disability insurance, there are several important considerations to keep in mind.

There are two types of disabilities that can be insured for: short-term disabilities and long-term disabilities. Short-term disability policies provide benefits for a few months to 3 years. The time you wait between when you place your claim and when you get your first check (called the elimination period) is 0 to 20 days. Long-term disability insurance providers have pre-set benefit periods that can be from a few years up to the rest of your life. The elimination period can be from two weeks to several months. You can also receive partial benefits which will allow you to work part time and still receive checks. This is a standard feature on some policies and an additional option on others. Policies can also be written to include Cost of Living Adjustments (COLA's). Policies can be written as non cancelable, guaranteed renewable, or conditional renewable. These categories all come with different levels of premiums.

The question is: what actual physical condition makes one disabled? This is entirely a matter of definition, and it's defined at the moment your policy is written. This is something that the buyer of disability insurance has to pay strict attention to, as this will determine his or her eventual payout. Generally speaking, the definition of disability breaks down into two broad categories: the "own occupation" definition, which states that because of sickness or injury you are unable to perform the functions of your job. This would vary by profession. A brain surgeon could not perform surgery with shaking hands, while a book editor could easily keep working while suffering this affliction. The more severe definition restricts disability to being unable to perform any work, although policies can be written to cover you if you can't perform work suitable to your age, experience, and education.

The importance, as usual, is in the details. A careful reading of your policy is absolutely necessary before you sign it, to ensure that the terms offered are the most generous possible, and that the language doesn't contain definitional pitfalls that can keep you from getting the help (and cash) you need if you become disabled.