Disability Insurance

Disability Insurance

Did you know that about 60 percent of Americans may develop an illness or get into an accident that could prevent them from working before they are 65? What will happen to them during the time when they are unable to earn an income because of their condition?

The good news is that the government is not sitting on this very likely possibility. Disability insurance is only one of the many federal benefits that the government gives to persons who are considered disabled under the law. Moreover, many private companies are also offering disability insurance programs and packages, thus increasing your options.

What is Disability Insurance?

Disability insurance is an insurance product designed to replace anywhere from 45-60% of your gross income should a sickness or illness prevent you from earning an income in your occupation. Most disability insurance programs are tax-free.

Disability insurance programs vary from company to company. This is not a product to simply shop for the most competitive. Thus, if you buy the cheapest disability insurance available in the market, you would be throwing your money away.

With disability insurance, you often get what you paid for. The odds of getting paid a monthly benefit under a cheap contract may be significantly lower than receiving benefits from a quality contract.

What is Disability?

Each policy has a different definition of disability. It is important that you know what your policy considers as a "disability" so that you may know when you would receive your disability insurance benefits.

There are three basic types. These are:

* Own-Occupation Disability Insurance
* Modfied Own-Occupation Disability Insurance
* Gainful Occupation Disability Insurance

Own-Occupation

This type of disability insurance has the most comprehensive definition of disability. A typical own-occupation policy would contain the following description of total disability:

The inability to perform the material and substantial duties of your regular occupation.

Modified Own-Occupation

Otherwise known as Income Replacement Disability Insurance, this type of policy has one of the most common definition of total disability:

Because of sickness or injury you are unable to perform the material and substantial duties of your occupation, and are not engaged in any other occupation.

Gainful Occupation

This type of disability insurance is very common in an employer sponsored policy. The disability contemplated here is often long term and includes property and casualty insurance. The typical definition:

Because of sickness or injury you are unable to perform the material and substantial duties of your occupation, or any occupation for which you are deemed reasonably qualified by education, training or experience.


Based on the above given definitions of what disability is, find out what type of coverage your disability insurance policy offers. It is possible that you may develop a sickness that may put you out of work for a while, however, this is not the type of disability that your policy covers. The result would be that you will not receive any benefits. Address this potential problem before it becomes a real issue by finding out beforehand what type of disability insurance you have.