What Does Disability Insurance Cover

What Does Disability Insurance Cover

Know What Is Covered By Disability Insurance

Disability insurance is designed to replace some of a persons income when they have been determined to be disabled and unable to work. In certain situations, it can replace up to 65 percent of a person’s gross income on a tax-free basis. The amount is based on person’s earnings from their occupation. There are a many different types of disability insurance available. Disability insurance can be provided by an employer or purchased by individuals.

Disability Insurance Types

The two most common types of disability insurance are short-term and long-term policies. Short-term disability insurance policies will provide coverage for an illness or recovery from an injury that lasts approximately six months. Long-term disability insurance is designed to cover a large percentage of a worker’s salary for a lifetime if necessary. There are also disability insurance policies that provide the refunding of premium payments, adjustments for cost-of-living as well as guaranteed renewal and more.

Cost

When compared to other types of insurance, disability insurance is an expensive product. Its cost outweighs the possibility of facing missing payments for a home or not be able to pay for many essential elements of life during a long recovery from an injury. The cost and coverage of disability insurance can vary greatly among companies offering the policy. The worker’s occupation, as well as health, lifestyle habits, will be considered. This includes the use of alcohol as well as tobacco and more. The amount of monthly benefits desired is a cost factor. The options provided within the disability policy will also influence the cost of monthly premiums.

Legal Issues

When a disability prevents someone from working disability insurance provides its policyholders with a number of protections and benefits. It is also possible for legal issues to occur. There are situations where a policyholder submits a claim when they’ve become disabled. It is denied because the insurance company does not believe the policy covers their injuries. It’s also possible the company does not agree with the diagnosis of the policyholder’s physician. There are many situations where disability insurance is regulated by state and federal laws. The process of submitting a claim is controlled by complicated procedures and rules. The appeal process can be complex. A disabled person may need to pay for things out-of-pocket until their claim is resolved.

Coverage

It’s important for people to realize disability insurance will provide the policyholder with money and not health coverage. This is the case with both short-term and long-term disability insurance. In some situations, an employee may be able to obtain health coverage from their employer’s benefit plan. Private disability insurance is not like Social Security disability. It will keep paying a policyholder a percentage of their salary without regard to age. There is no cap when it comes to the amount of monthly payments. With some private disability insurance policies, there may be no limits on age or type of disability.

Benefits

If a person is unable to work, disability insurance will help them meet their expenses and maintain their standard of living. Individuals have been able to use disability insurance payments to remain current on their car payments, mortgage payments, health insurance and more. It can also be used to pay for other essential items such as clothing, food as well as utilities and more. Disability insurance is able to provide a person financial security until they can return to work.