Disability Insurance

What is Disability Insurance | All You Need to Know

Lady filling an insurance form
Written by Brandon

Disability insurance is a kind of insurance that offers coverage in the case of an occurrence whereby a worker becomes physically impaired to work in order to earn a living. There are several organizations that render numerous types of insurance for people with disabilities. Each of these insurance firms has principles on which they operate the disability income insurance

Insurance on its own covers different categories. In the insurance world, there are different kinds of insurance such as health insurance, travel insurance, property insurance, liability insurance, Guarantee insurance, social insurance, fire insurance, life insurance, auto insurance, business insurance, casualty insurance, and among others.

Disability insurance is sometimes called income protection, disability income insurance or DI. This insurance secures the beneficiary’s earned income should there be an eventuality. For instance, a worker may become physically handicapped such as injury, ailment, or a condition that leads to physical impairment. Disability insurance helps an individual when problems like this arise.

Types of Disability Insurance and what they cover:

There are two different types of disability insurance: short term disability insurance and long term disability insurance.

1. Short term disability insurance

This insurance plan offers a worker a portion of their income or salary of at least 60% if they become physically impaired for a short period of time. This takes between three to six months.

In general, short term disability insurance offers income if you can’t carry out your normal activities due to an illness, accident or if you are still recovering from your childbirth. If any of these occur then this insurance gives you that backup you need.

2. Long term disability insurance

This insurance policy offers a worker a portion of their salary or income if they become physically handicapped for a longer period, this long term DI is usually above six months.

Both types of insurance have a starting date, which implies it has a certain timeframe; you must be impaired before your benefits commence. One thing you should have at the back of your mind is the benefit period, and the longer your benefit period the higher your premium.

If an accident or injury happens that makes you stay away from work to the point your short term disability insurance benefit expires, your long term disability insurance starts where your short term disability insurance stops. That is why you need to wait for 3 months or more before your long term disability insurance starts paying benefits.

Who Needs Disability Insurance plan?

Everybody should have this insurance plan with respect to the kind of work they do either as a low-income earner, or high-income earner. The truth of the matter is people are likely to become physically impaired while working with heavy machinery or equipment when compared to people who sit in front of a computer from morning till night. This is the reason it is advisable for everyone to protect their salary for the long haul.

Furthermore, it is risky working as a soldier, pilot, or firefighter, etc. Insurance premiums are available due to the level of risk that is involved in this kind of jobs, therefore, the higher the risk the higher the premiums. This disability insurance is not to make you wealthy! It is there to pay up your bills and place food on your table if something bad happens to you.

The Cost of Disability Insurance:

The cost of disability insurance (premiums) for both short term and long term disability insurance plans can range from 1% to 3% of the annual income of a worker. Therefore, if a worker earns #50,000 per year, that is #60 to #125 every month.

But you have to pay less if you are getting a long term disability insurance plan with a longer elimination period. Other factors that can act as a determining factor to the premiums you pay monthly are age, income, lifestyle, etc.

Since insurance firms are not known for making things simple for their clients, another thing that increases the cost of disability insurance is their definition of disability. For instance, if you want a plan that covers your work as a laundryman, your premium would be higher more compared to a plan that covers you while working in an office.

How does Disability Insurance Works?

This insurance comes in diverse ways and is gotten via a broad range of providers for the different price ranges. The cost of a disability insurance plan depends on the duration of the elimination period, and how severe the disability definition is under the plan. Each plan can have its own terms of what meets the criteria as ‘disabled’ so it is imperative to know these policies before buying a disability insurance plan.

The two most widespread meanings are ‘own occupation’, where an individual is being considered disabled if they can’t perform the occupation they once do as a result of being disabled, and ‘any occupation, where an individual is considered disabled if they can’t do any job at all.

Apparently, the ‘any occupation’ meaning is stricter. All else being equal, the plan with a stricter definition of physically handicapped will be the cheaper plan because there is less of an opportunity of having to pay more in a stricter plan.

How to Get Disability Insurance Plan?

You can obtain a disability insurance plan by going in search if your employer has a long term disability insurance policy. If they don’t, then you need to meet with an insurance professional. The reason you need a professional is for them to guide and help you to get the right disability insurance that will fit your situation.

It is not easy to deal with disability because they can become scary; you have to think about how to pay bills. That is why you must protect your income with the right type of disability insurance that will keep your family and future protected.


Disability insurance should be an important part of your financial plan because it secures your ability to meet your goals, even if you don’t work due to illness, accident, and others. It is essential to endeavor that your disability insurance plan meets your current and future needs.

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