Disability Insurance

Disability Insurance, often called DI or income protection, or disability income insurance, is a type of insurance that remunerates disability benefits as a partial replacement of earnings lost because of an injury or illness. Most of the policies remunerate a fixed amount for a fixed time whereas others remunerate a once-a-month amount for the whole time the person covered by the insurance is disabled from making a living. The insured experience, training and qualifications determine his or her pay.

Most people forget to protect their most valued asset, which is the aptitude to work and make a living. As long as a person needs his or her income, or someone else depends on it, then there is the need to protect the aptitude to earn that income. However, if a person already has enough money to live on for the rest of his or her life, he or she possibly does not need the policy.

In the event of an injury or a disease that renders a person disabled, he or she can file a claim and receive the benefits. However, to receive benefits under a disability income insurance policy, one must meet the definition of partial or total disability as stipulated in the policy. Each policy is different; therefore, one should check the definitions of partial or total disability in a policy before purchasing it.

Disability income policies are of two types, which include long-term disability policies ad short-term disability policies. The two disability policies have different protection features, and these features include noncancelable and guaranteed renewable. Noncancelable means the insurer, except for failure to pay premiums, cannot cancel the policy. On the other hand, guaranteed renewable means the insured is entitled to renew his or her policy with similar benefits and the policy not canceled by the insurance company.

In addition to the disability income policies, there are some options a person should think through when buying a policy. These options include partial or residual disability rider, waiver of premium provision and cost of living adjustment as well as coordination of benefits, return of premium and addition purchase options.

Disability insurance has several benefits, with one of the most vital being that it provides income to keep a home afloat when the insured is disabled, especially if he or she provides for the family. The short-term disability policy will replace a portion of lost income for a limited time, usually less than a year. The long-term disability policy will replace a portion of the lost income for a stated time, usually more than a year.