Most employers offer some kind of disability insurance, but you should find out exactly what your employer offers before you have to file a claim. Most allow some short-term sick leave, which might last from a few days to as much as six months. Five states and Puerto Rico have Temporary Disability Insurance (TDI) programs to provide income support to individuals who are out of work because of a non-work-related illness or injury.
If you are disabled or unable to work as a result of an accident or illness, disability income insurance, which complements health insurance, can replace lost income. There are basically three ways to replace income:
1. Employer-paid disability insurance
2. Social Security disability benefits
3. Individual disability income insurance policies
Disability insurance is critical protection against loss of income, but if your employer doesn't provide it, it can be an expense. Learn how to save on your policy.
Disability premiums are based on your age, sex, occupation and the amount of potential lost income you are trying to protect.
In general, the lower the chance that your occupation puts you in harm’s way, the lower the premium. The higher the chance of injury, the bigger the premium. So, for instance, an accountant working in an office would have much lower disability premiums than a construction worker.
There are two types of disability policies: Short-Term Disability (STD) and Long-Term Disability (LTD):
Short-Term Disability policies - have a waiting period of 0 to 14 days with a maximum benefit period of no longer than two years.
Long-Term Disability policies - have a waiting period of several weeks to several months with a maximum benefit period ranging from a few years to the rest of your life.
Disability policies have two different protection features that are important to understand:
Forty-three percent of all people age 40 will have a long-term disability event by age 65. Learn how you can replace lost income and help protect you and your family from an otherwise financially catastrophic illness or injury.
Few people ever anticipate experiencing an illness or accident that might cause them to miss months or years of work, but it can happen. Disability insurance can help you stay on top of your finances. When you don’t have to worry about how to replace your income, you can focus on decisions regarding your health. Because of the financial stability, disability insurance benefits can provide to your household, getting it even when you are young or in good health can be a savvy financial planning move.