Disability Insurance

A Disability Insurance policy is insurance that replaces some or all of an insured person's income if he or she is unable to work for a period of time due to disability or illness.

While most people think of wheelchairs and walkers when they think of disabilities, many incapacities are actually caused by disease, such as heart disease, cancer, or diabetes. The Council for Disability Awareness states that musculoskeletal and connective tissue disorders, such as neck and back pain, are the leading cause of long-term disability claims, but cancer is second.

According to data from the Life and Health Insurance Foundation for Education, a 35-year-old male with a white collar job has more than twice the risk of being disabled for at least 90 days than dying before age 65, while a woman of the same profile has more than three times the risk. For most people, this means that becoming disabled is a far greater possibility than dying young. The unfortunate reality is that being unable to work for a long period of time can have a devastating effect on someone's finances-and yet, according to the same organization, only half the number of people who have life insurance also hold group or individual disability policies.

Policies are available as two major types: short-term and long-term. Short-term disability policies usually begins after sick leave is exhausted and can cover disabilities that last for a few weeks up to two years in length. Long-term disability kicks in after the short-term policy's term has ended and can last anywhere from two to three years up to age 65, depending on the details of the policy.

Both types of policies replace income on a sliding scale. A short-term disability policy may replace as much as 90% to 100% of income for the first few weeks, then decrease to something more like 65%. A long-term insurance policy usually pays a lower portion of salary throughout, closer to 65% or 60%.

Many people obtain insurance through their employers, though individual policies are available as well. In some cases, there are short-term disability benefits mandated by the state; there are also some long-term disability benefits available through the Federal Government. But both of these tend to provide far less income replacement than policies through private insurers.

Because of the potentially catastrophic consequences of a disability on a family's lifestyle and income, insurance coverage for disabilities is a key protection for working people.

Insurance Quotes

The term "insurance quote" refers to when an insurance company assesses a risk, in this case, a person's likelihood of becoming disabled and being unable to work, and determines what it needs to charge as a premium in order to insure that risk. An insurance quote is not a binding contract for insurance, just an offer of a price.

There are a number of ways that an individual can obtain a quote, including through a licensed insurance agent, through a company directly, or online.

When obtaining a quote, an individual should make sure to have handy all pertinent information about the risk to be insured to answer any questions that may come up. For an insurance policy, this includes information about salary and bonuses and may also require some medical background data.

Any insurance consumer should always compare quotes from several companies because pricing can vary widely, even for similar policies designed to cover the same risk. It is very important, however, when comparing quotes, to make sure the policies being compared have the same provisions and coverage. The details of disability insurance policies can be different from company to company, and the policy with the cheapest quote may not provide the best insurance coverage. The overall quality of the insurance company, including financial health and customer satisfaction, should also be considered when selecting the best coverage.