What You Need To Know About Disability Insurance

Introduction

Disability insurance is actually one of the oldest types of health insurance. Today there are actually numerous types of disability insurance available for you to choose from. This insurance is meant to cover you in the event that you are unable to work.

History And Function Of Disability Insurance

In yesteryears it was inexpensive to get medical treatment, especially whenever you compare it to today’s prices. The real cost lie in the amount of time that people would have to take off of work. For this reason, in 1850 the Franklin Health Insurance Company of Massachusetts offered the first accident insurance policy. This worked in the same way that disability insurance works today. However, this insurance only covered steamboat and railroad accidents. Eventually other companies did create different types of plans that covered illnesses and other types of accidents. Then in 1911 an employer plan finally emerged.

Even today you cannot get disability insurance for more than you earn at work. This is because disability insurance is simply meant to replace your income in the event that you are not able to work for a long period of time due to an accident or illness. As such, companies fear that if they were to allow people to take out disability insurance for more than they earn at work they would suddenly start filing fraudulent claims. Fortunately, these payments are not taxed though.

Types And Features Of Disability Insurance

You need to decide whether you want disability insurance that will pay if you are unable to do your job or if you are unable to work at all. If you choose the type that pays if you are unable to continue in your occupation, you would receive monthly checks. Even so you will need to look at your policy to see what type of a waiting period there is and how long it is.

There is also short-term disability insurance that will pay quickly but only for a short period of time. Usually this only requires you to be sick for between 7 and 10 days and then it will pay for only 13 to 26 weeks. During this time it will pay you a percent of your income. This is good because it will take a while to set up long-term disability insurance or get Social Security.

Clearly you can see why it is so important to choose enough to pay your bills. There are some companies that will even help you pay off your loans too. However, they tend to cost more. Regardless, your price will go up as you grow older. For this reason, a private policy is actually more efficient.

Comments

Most Recent Articles