Both personal insurance (e.g. car insurance, homeowners insurance, disability insurance, life insurance, disability income insurance) and public insurance (e.g. medical insurance, federal social insurance, unemployment insurance, public transportation, public housing, local government services) are some of the most important means of protecting your finances from unpredictable or catastrophic disability.
Insurance for disability includes not only insurance against the loss of income, but also insurance against what most people call a disability. A disability is a condition that makes it very difficult for you to do work (or to do any work at all) for a sustained amount of time.
Consider what would happen if your driver’s license, work identification, or Medicare benefits were revoked because you fell down or got sick and couldn’t work. How long would you stay unemployed? Where would you go to work if you could work? How long would you lose income?
Even if you lost your job, you could still lose your benefits if you were hospitalized or hospitalized to get treatment for a disabling condition. But if you were forced to miss work for a chronic illness or for treatments, your financial situation could suddenly get much worse. In that case, insurance can protect you from losing your job and your health insurance to other conditions.
Typical insurance for disability covers a specific condition. In most cases, disability insurance is purchased by someone who is already receiving a specific type of public benefit or insurance. Those who are receiving disability insurance from Social Security or Medicare or their state or local public insurance benefit are already receiving disability insurance, but the coverage is considered more insurance than just a benefit.
What do disability insurance policies usually cover?
In the past, people typically purchased disability insurance policies to protect themselves against the risk of losing or losing certain benefits. Disability insurance pays for health and disability care if a person becomes disabled due to a condition (or chronic disease) such as heart disease, cancer, or Alzheimer’s. Most disability insurance policies also cover death benefits, disability income, and other care.
Benefits for a disability insurance policy typically start when you are first eligible. Most commonly, you become eligible to receive benefits after you’ve missed 30 percent or more of the payments for your current disability or after you have received an unpaid disability reduction or have been judged unfit for work (as defined by the Social Security Administration).
Some disability insurance plans can pay benefits for up to a decade, so if you develop an illness during that period, you would be protected financially. Other disability insurance policies only pay benefits until the person becomes disabled and can no longer work. Because most private disability insurance policies are long-term policies, most people never reach that point.
What’s the difference between disability and disability income?
A disability can be financially devastating. Yet disability income is very similar to disability insurance. In most cases, a disability benefits plan pays benefits until you become eligible for a public disability insurance benefit or qualify for disability insurance. The insurance is intended to help you if you are unable to work due to illness or injury. However, disability insurance is very different from disability income.
In most cases, a person who is on disability insurance is receiving benefits for a disability that affects a person’s ability to work. If the person’s disability lasts more than a few years and keeps the person from working, that’s usually considered a disability related to the person’s disability insurance.
However, people who receive disability income from Social Security or Medicare are not receiving a disability. Even if their primary disability is related to their Social Security or Medicare benefits, their disability income does not count as disability insurance. Disability insurance benefits are typically earned and paid, but disability income is just payment for care and services that the person cannot provide.