DISABILITY INCOME

The Benefits of Disability Income to Individuals and Businesses

Disability income is an insurance plan that protects a policy holder against the possible financial impact that a disabling illness or injury might cause. With this type of insurance, you are able to prepare for unexpected events such as stroke, cancer or car accidents that may prevent you from meeting your financial obligations. In the insurance industry, a disability refers to a medical condition that leaves an individual unable to perform the most important aspects of his or her occupation, resulting in an income loss of 20 percent or more.

Long and short-term policies
Due to medical advances and work flexibility, total disability is not necessary in order to qualify for disability benefits. Proportional benefits are also availed in case an individual can only work part-time. In addition, temporary disability is also considered in cases such as recovery from childbirth and surgery or while undergoing cancer treatment. Short-term disability benefits help to replace a significant portion of your prior earnings for a specified amount of time. On the other hand, long term disability insurance policies last until you return to work or until the end of the benefit period stipulated in the policy.

Benefits to individuals
Part of the benefits you get from disability income offers is regular payments on a tax-free basis. While health insurance covers your medical costs in case of illness, disability income replaces lost income in case you are unable to work. It should be noted that a person’s life savings could easily be drained by the costs of a disabling illness or injury exclusive of medical fees. In addition, while you may assume that your worker’s compensation is sufficient, it only covers accidents or injuries that occur on the job. Social Security also offers disability insurance, but this only pays a limited benefit for the most severe disabilities (those expected to last at least 12 months or result in death).

Benefits to businesses
A business could benefit from offering disability income insurance to employees. In fact, it often enhances a company’s ability to retain and reward its employees. In addition, disability income could help keep the business running in case an owner becomes disabled – by covering part of the overhead expenses. In addition, it provides multiple owners the option of buying out an owner that becomes completely disabled by availing the funds necessary to do so.

Employee benefits
Although disability income is frequently offered as part of an employee benefit package, it could also be purchased by individuals. When such coverage is provided as an employee benefit, the company is considered the policyholder. As such, the company would make the necessary decisions concerning the type of coverage and provisions offered to the employees and would also meet the cost of the coverage.

Individual coverage
On the other hand, you could purchase individual coverage directly, which would mean that you would make all the decisions concerning the coverage as well as meet the associated costs. Depending on the quality of coverage that the employer offer, employees are sometimes advised to consider purchasing additional individual coverage. This is because many employees who completely depend on their employers for coverage do not receive the protection they thought they had.