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What Is Disability Insurance?

Disability insurance pays some or all of your salary if you become disabled and can't work at your job. According to the Council for Disability Awareness, at least one out of every four workers will become disabled at some point during their working career.

Disability can come from a car accident or serious injury on the job, such as an amputation. It can also arise from other debilitating illnesses, such as cancer or a heart attack. Disability insurance can reimburse disabled workers for some of the income lost while recovering from illnesses and personal injuries.

This article discusses the types of disability insurance, the basics of disability insurance, and why you should get it. It also mentions how much disability insurance costs and how to get it. Finally, it addresses the legal issues surrounding disability insurance.

Why Get Disability Insurance?

Private disability insurance is beneficial because it can cover about 70% of your salary as a worker when a disability arises. This is true regardless of your age. Social Security disability insurance, in contrast, only covers most workers after they reach a certain age. Social Security disability benefits are administered by the Social Security Administration (SSA). Benefits are capped at a maximum monthly payment regardless of a worker's salary.

Some workers may be covered by disability insurance through their employers. But many workers have limited coverage or no coverage at all. Workers with little or no coverage can buy private disability insurance to protect their earning power and provide for their families if they're prevented from working due to an illness or injury.

Types of Disability Insurance

Private disability insurance policies usually come in the form of either short-term disability insurance or long-term disability insurance packages. Short-term disability insurance usually covers disabling illnesses for up to six months. Long-term disability insurance can cover much of a worker's salary for an entire lifetime, if necessary.

Many insurance companies also offer additional protections and options. These include cost-of-living adjustments, guaranteed renewal, and refunding of some premium payments if you don't become disabled within a specified time.

How Much Does Disability Insurance Cost?

The cost of disability insurance varies widely, depending on several factors. These factors include the following:

  • Your occupation
  • Your health
  • Your lifestyle habits, such as tobacco or alcohol use
  • The amount of monthly benefits you intend to receive
  • The disability insurance policy's options

Compared to other types of insurance, such as life insurance or auto insurance, disability insurance can be expensive. Some estimates price premiums at several thousand dollars per year.

Suppose you pose a higher risk of injury or illness due to having a dangerous job or a preexisting health condition. In that case, you'll likely pay a higher premium. But depending on your circumstances, the cost of disability insurance can outweigh the risk of losing your home or not being able to provide for your family if you're disabled.

How Do I Get Disability Insurance?

You usually buy private disability insurance through an insurance broker. This is similar to how you'd buy life insurance or homeowner's insurance. To receive an accurate quote and determine your eligibility, you'll need to provide your insurance broker with information about:

  • Your occupation
  • Your income
  • Your age
  • Any existing medical conditions you currently have
  • Any dependents you support with your wages

Based on this information, the broker will assess the likelihood of you becoming disabled. They'll determine a monthly or annual premium you would pay to receive the benefit payments you desire.

Disability Insurance: Legal Issues

Disability insurance can provide policyholders with many benefits and protections, but legal issues can still arise (as with any contract). When you submit a claim as a policyholder after becoming disabled, your claim might be denied. This may happen because:

  • Your insurance policy doesn't cover certain injuries
  • Your insurance company disagrees with your doctor's findings that you're disabled by your impairments

Some disability insurance policies, especially those provided by employers, are heavily regulated by complicated rules and procedures. Follow these rules and procedures to the letter to ensure your claim isn't denied. Appealing the denial of your claim is often a complex process. You may have to pay out-of-pocket expenses, like medical bills, while your claim is considered and reconsidered by your insurance company or a judge.

Protect Your Interests: Call a Disability Lawyer

Suppose you've sustained car accident injuries resulting in broken bones, a spinal cord injury, or a traumatic brain injury, and you've filed a disability claim related to your auto accident. Whether your disability insurance policy is short-term, long-term, employer-sponsored, or private, you may face legal issues requiring a disability attorney's help. If your accident wasn't work-related, you won't be eligible for workers' compensation benefits.

Find a disability law attorney in your area to navigate your disability insurance benefits. They can help ensure you have adequate funds to cover medical expenses associated with any medical care you may need after a car crash or back injury. Learn more about state-specific laws on our insurance legal answers page.

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