How Does Disability Insurance Work?

Disability insurance can be used to replace lost income and can be purchased through your life, health, auto or business insurance company. Before purchasing this type of policy, make sure that you understand what you are buying and don’t be afraid to ask questions.

According to the III, 43 percent of people aged 40 will encounter a disability lasting more than 90 days by the time they reach the age of 65. Keep in mind that insurance rates are currently at an industry all-time long that can fit into almost everyone’s budget and insurance needs.

Purchasing a life insurance policy can ensure the financial stability and well-being of one’s family in the event of a premature death.

However, the Insurance Information Institute (III) notes that there are other ways a person could lose their income, which could drastically alter a family’s lifestyle. The information provider says that accidents or falling ill could produce the same outcome.

The organization notes there are a few options consumers may pursue in order to replace lost compensation:

  • Disability insurance provided by an employer, which is mandated by most states.
  • Disability benefits from Social Security, which can be paid out to people who expect to be laid up for more than 12 months.
  • A separate disability insurance policy, which could come through workers’ compensation or through a specially purchased policy.

Regardless of the type of policy you may pursue, it is probably a good idea to look into disability insurance.

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