What is Disability Insurance?
“The Social Security and Supplemental Security Income disability programs are the largest of several Federal programs that provide assistance to people with disabilities. While these two programs are different in many ways, both are administered by the Social Security Administration and only individuals who have a disability and meet medical criteria may qualify for benefits under either program.”
- Social Security web site, June 2006
The Social Security office will want to check your medical history to be sure you qualify for disability benefits. The Social Security office is one way to get disability benefits, but in most cases these benefits will not be substantial enough for families.
Disability insurance can be obtained through any number of insurance companies. In the event that you are disabled, this insurance will serve as financial protection. You will receive a percentage of your gross income from your disability insurance policy, income that will ensure your own financial safety.
You do not have to go through the Social Security Office to take out a disability insurance policy, nor to receive the benefits from that policy. The Social Security disability program is not related to any disability insurance policy that you take out.
“Individual disability insurance is truly a basic concept. It is an insurance product designed to replace anywhere from 45-60% of your gross income on a tax-free basis should a sickness or illness prevent you from earning an income in your occupation. Every disability insurance policy from every insurance company is very different, this is not a product to simply shop for the most competitive rate. To buy the cheapest disability insurance policy on the market is to throw money away. The odds of getting paid a monthly benefit under a cheap contract may be significantly lower than receiving benefits from a quality contract.”
- About Disability Insurance web site, June 2006
Types of Disability Insurance
Most people are familiar with two types of disability insurance: short-term disability, and long-term disability. Short-term disability insurance is included as part of a benefits package with many different employers, and usually provides an income in the early part of disability. Short-term disability insurance generally provides coverage for a period of several weeks, and does not exceed a two-year term.
Long-term disability, however, can last for a period of several years. These types of policies may be included as a part of employment, in a benefits package, but many purchase these disability insurance policies individually.
As far as disability insurance goes, however, there are still more policies to learn about. One type of disability insurance is the Own-Occupation Disability Insurance. The definition of this policy reads: Read more…