Syndicated Financial Columnist, Host of the weekly talk show Steve Savant's Money, the Name of the Game, Scottsdale Arizona
Disability insurance is paycheck protection against sickness and injury. While medical insurance pays the bills of hospitalization, disability pays a tax free benefit or income when you can't work. When you file a claim with the company, you generally have an elimination period like 90 days before benefits begin. Benefits are paid out during your disability according to your benefit period, i.e. five years or to age 65.
Disability Insurance protects your income during times of being disabled. Short Term Disability covers injuries and illnesses with a fairly short recovery time, normally a few months. Long Term Disability covers longer periods of disability, up to retirement age.
How long the policy pays, and whether it only pays for full disability or also when unable to work full time, depends on features chosen in the policy. You can also pick how much of your paycheck you want to replace, up to a limit.
Disability Insurance is a type of policy that pays a cash benefit to the Insured if the Insured cannot work due to an extended illness or injury.
When buying the policy, you select an elimination period, which is the waiting period until the policy pays out. As a rule, the longer the elimination period, the lower the premium. If you become "disabled" (laid up with a bad back, chemo treatments, or any other range of impairments that can keep you from working) beyond the time of the elimination period, the policy will pay you cash until you are able to work again.
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How long the policy pays, and whether it only pays for full disability or also when unable to work full time, depends on features chosen in the policy. You can also pick how much of your paycheck you want to replace, up to a limit.
When buying the policy, you select an elimination period, which is the waiting period until the policy pays out. As a rule, the longer the elimination period, the lower the premium. If you become "disabled" (laid up with a bad back, chemo treatments, or any other range of impairments that can keep you from working) beyond the time of the elimination period, the policy will pay you cash until you are able to work again.