Disability income insurance is a type of medical insurance that will replace a portion of your earned income if you become disabled and are not able to work from either an illness or accident.
There are essentially two different types of coverage: Short Term Disability and Long Term Disability. As the name suggests Short Term disability insurance is designed to replace your income immediately but for a limited amount of time normally three months to one year. Long Term Disability is the opposite. It normally will not begin paying benefits for anywhere from three months to one year (commonly six months). However the benefits are generally are paid for anywhere from five years or age to age 65.
Short Term coverage is primarily used for accidents such as a broken leg where you may not be able to work but the disability is temporary and you expect to resume working in a few weeks or months. Long Term coverage is for those disabilities where the disruption of income will be extended or permanent.
As one might imagine Short term coverage is less expensive then Long Term coverage due to the risk to the insurance company. There a several factors to weigh when obtaining coverage such as the waiting period before benefits begin, duration of coverage and importantly does the coverage provide benefits for a partial disability and also the definition of disability. A policy with an “Own Occupation” of disability is preferred but not available to all professions.
Disability coverage is often overlooked in planning for wealth accumulation and protection however the chance of a long term disability is five times greater than premature death prior to age 65.
Macaulay Insurance Agency represents several major disability carriers and can help you to obtain the coverage best suited to your needs and budget. For more information please contact us.