Disability can strike at any age and this can cause problems for those that are working. Suffering a disability can mean an extended period off work and the financial hardships this may cause in terms of lost earnings. Investing in a disability insurance policy can provide some protection against the effects of this should it occur. It is therefore a style of insurance that the main breadwinner in a family, if not others, should consider.
What is Disability Insurance?
A disability insurance policy is basically a type of insurance that pays the claimant a set sum of money or a percentage of their salary, should they suffer a medical condition or disability that renders them unfit to work. Usually this is paid on a monthly basis and helps to ensure that should someone not be able to carry out their job, they are not left without a source of income. This can be important for those that are the main wage earner in a family, although can be useful for any employee to make sure they have access to some money during they time they are not working because of a disability. Having the funds to continue paying for a mortgage or other key monthly bills is important to most people and disability insurance can help with this.
What Are the Various Types Available?
There are a few types of disability insurance policy available. A common type is private individual disability insurance and this is typically used by those whose employer does not provide them with benefits. Without it they could be left without a source of income should ill health stop them working and disability insurance can therefore provide them with some security that they will not be left without money. Disabilities can occur because of work related accidents and some companies therefore offer group disability insurance to their employees as a benefit. While some of these policies pay out only if the disability is a work related injury, others can pay out for any injury and it is worth checking the exact details before signing up to a policy.
While it can be important for individuals to have disability insurance, it can also be something that an employer should consider. Many businesses have key employees that are critical to the running of a company, and if these should be off work due to illness or disability, this can cause financial problems. Key-person disability insurance is designed to assist with this and can provide an employer with money to hire temporary cover should the employee be off work for a short period of time. If the disability is permanent, the insurance cover can provide financial assistance to hire and train new staff to replace a key employee.
What Benefits Can Be Received?
A disability insurance policy typically pays a set lump sum each month to the person insured. This can be a flat dollar amount or it can be calculated as a percentage of the claimant’s salary at the time the disability occurs. Typically, the actual sum can vary from policy to policy, although in many cases up to 60% of an individual’s salary to a maximum of around $5,000 per month can be received. The actual amount will depend on a few factors such as whether long-term or short-term insurance is chosen, the types of disability covered, the elimination period, which is the number of days following the disability that the insurance starts to pay, and the benefit period, which is the number of months that the insurance is paid.
What Companies Offer Disability Insurance?
There are a number of companies that offer disability insurance, providing a range of options for those that choose to invest in this. Some of the well known insurers that provide it include Mutual of Omaha, MetLife and State Farm. These offer options for both individuals and businesses and can be decent companies to look to for a disability insurance policy.
While most people don’t really consider the risks of suffering a disability, the statistics generally show that there is a reasonable chance that it can occur. In most cases this will be a short term problem, although even this can result in time off work and loss of earnings. Having a disability insurance policy can provide some security that should you not be able to work as a result of illness or disability you would still have some money to meet your key monthly payments. For this reason it can be a type of insurance that is worth considering having.