Disability Insurance, sometimes called disability income or welfare insurance, is a type of insurance that covers the beneficiary’s earned disability against the danger that a disabling condition creates a complete blocking barrier to completion of essential work functions. This type of insurance is intended to cover expenses that occur as a result of a disabling condition. Some examples of disabling conditions are arthritis, heart disease, cancer, strokes, and Parkinson’s disease. The insured person’s earning potential is also taken into account in determining the amount of coverage. The premiums of this type of insurance are based on a number of factors such as the insured’s age, health problems, and the number of years of applicable employment. There are also several special policies that may be available, depending upon the disability of the insured.
Under the terms of a standard policy, a disability insurance policyholder may choose to take on full or partial responsibility for the cost of his or her benefits. Full responsibility means that the policyholder assumes all of the risk for his or her own future earning potential while a person who chooses to “partner” with an insurance company, referred to as an “affiliator”, takes on only a partial responsibility. If a policyholder has dependents, he or she may also choose to take on a part-time or full-time responsibility for those dependents. Depending on the insurer, an individual may be permitted to select a level of coverage that allows him or her to continue to earn benefits while continuing to receive necessary medical care. This type of policy allows policyholders to decide how much he or she can afford to cover, up to the limits that the company dictates Doctors disability insurance.
In addition to providing coverage for an insured person’s lost wages, disability insurance policies also pay into Social Security and Medicare. Each month that the policyholder remains employed, he or she must then pay into these programs based on the paycheck amount received. For example, if the insured’s pay check is $1000 a month, then he or she would have to pay into Social Security based on this amount every month. However, if the amount is much less, then he or she would have to pay into Medicare. If a person is unemployed, the money that is left over from monthly disability insurance premiums is subtracted from the person’s final pay check, to be distributed to the various insurance companies. Disability insurance pays out once a percentage of the expected earnings for a specific period has been reached, usually around sixty percent.
Disability insurance does not make payments towards a person’s lost income when they are unable to work. These types of policies do not provide for the costs of lost wages, as they are considered taxable income. Disability insurance provides payments, however, towards the medical bills of an injured or disabled person. These types of policies do not pay towards the cost of living while one is unable to work. Neither do they cover things like child care, transportation and debt consolidation.
A group plan may be an option for some individuals. Under a group plan, the same payments, which would be dispersed through Social Security, are distributed between the employees of a company. The company, in turn, pays these benefits out to the employees in order for them to receive them. Group disability insurance plans typically have less stringent rules than do individual plans, since the benefit level is typically limited to a set percentage of one’s wages, but the same percentage limits apply to both types of plans.
In order to determine which disability insurance companies offer the best benefits, individuals should consult with both an agent and an underwriting professional. An agent can offer advice as to the best type of coverage to purchase, while an underwriter will provide solid financial footing for an individual to purchase. Both agents and underwriters have experience in the field of disability insurance and can assist a person in determining which plans offer the best benefits. By consulting with an agent or underwriter, an individual can find the exact type of coverage that will suit his or her needs best, in addition to finding a company that offers the most competitive rates.