How Does Disability Insurance Work?

Disability insurance is designed to cover your income if you are no longer able to earn money through work due to a disability.
Disability insurance paperwork

Disability insurance may only cover a portion of your paycheck, however. You will not receive the full paycheck on disability insurance as you would if you were normally working. Disability insurance can be purchased through many employers or purchased separately through monthly premiums in return for coverage.

Types of Disability Insurance

There are two main types of disability insurance: long-term and short-term disability. Short-term disability policies pay up to about two years for lost wages while long-term policies can last as long as the disability.

For example, if say you are involved in a car accident and suffer a spine injury that affects your legs. You cannot work while you are recovering, including physical therapy and rehabilitation. After a few months, you are cleared to work again. In this case, you would need short-term disability insurance to supplement your lost income while you are unable to work.

On the other hand, say you are diagnosed with an autoimmune disease. As you begin treatment, you are unable to work. Unfortunately, autoimmune diseases can rise and fall in severity without notice. You could go through treatment for several years, during which you would not be able to work. A long-term disability insurance policy will help with your income during this period.

Disability Insurance vs. Workers Compensation

Your employer likely offers workers compensation, which includes disability benefits. There is a difference between the benefits offered by workers compensation than through disability insurance, however. Workers compensation only covers disabilities that result from a work-related accident or injury. Unlike disability insurance, workers compensation will only cover disabilities you obtain at work. If your disability is unrelated to your work, it will not be covered by workers compensation.

Can You Receive Disability Insurance and Unemployment Benefits Simultaneously?

Unfortunately, you cannot receive disability insurance benefits alongside unemployment benefits. Make sure to speak with your insurance agent about what coverage you need and what benefits are best for you.

How Do You Qualify for Disability Insurance?

To qualify for disability insurance benefits, your situation must fall beneath the policy’s determinant of a qualifying disability. You may qualify for disability insurance benefits if you cannot work like you did before, you cannot adjust to new work due to your medical condition, and you meet the previous income requirements.

Speak with an insurance agent about your disability insurance options.

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