What is disability insurance?

Disability insurance provides partial income so you can pay your bills if you get too sick or injured to work. It’s simply income or paycheck protection.

Disability happens more often and to more people than you may think. Disabilities that are caused by illnesses like heart disease, arthritis, and cancer are more common than disabilities from injuries.

Short-term vs. long-term disability insurance

Short term policies help you right after an incident and will replace a portion of income for about 3-6 months. Long-term policies will generally begin six months after the disability and can last years or even until retirement age. Your long-term disability plan will typically pay between 50% and 70% of your pre-disability earnings up to a maximum.

When will I receive benefits?

After you’ve met the definition of a disability in your policy, you must fulfill your elimination period. The elimination period is the waiting period or length of time from when your doctor diagnosed the disability to when you can start collecting from the disability insurance policy. After the elimination period has been satisfied, you’ll start to receive your monthly benefit.

How long do benefits last?

The benefits last until you can go back to work or for the number of years stated in the policy. Some people choose to buy policies with a benefit period that lasts 5 years, while others choose a benefit period that lasts until they are retirement age.

The Bottom Line

Disability insurance is income protection. People don’t plan on becoming disabled, but if you get in an accident or get too sick to work, disability insurance can be very meaningful.