Disability Income Insurance 101

A disability income insurance policy provides a monthly income in the event the insured becomes disabled and is unable to work due to a non-work related health condition or injury. These policies are in addition to government-sponsored programs which provide an income during disability such as Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI).

There are:

• Short term and long term disability insurance policies. A short-term disability insurance policy covers for a period of up to 6 months. A long term policy can cover for a period of years, to an age certain such as age 65, or possibly for life.
• Individual and Group Disability Income Insurance Policies. Individual policies are offered through insurance brokers or insurers directly. Group policies may be available through employers or other organizations such as unions, or professional associations.

The ability to find an individual policy when you have a history of a health condition varies from state to state. For example, there may be a limit on the amount of time you can be denied disability insurance based on a health condition.

Should you become disabled for a period of 6 months or longer, this coverage can provide an important supplement to government income benefits such as Social Security Disability Insurance (SSDI) and/or Supplemental Security Income (SSI), or to any other income you may have. There will still be bills to pay, even though you may be unable to work. In fact, expenses could be greater than when you are able to work, even for people who have health insurance.

There is no such thing as a "standard" disability insurance policy. In fact, the features to note are slightly different between individual policies (you purchase on your own) and group policies (provided through a group such as an employer, union or association.)

For example, a feature not found in group disability insurance policies is that almost all individual policies require medical underwriting (an examination of the applicant's health condition). The longer the period of time since the last episode with your health condition, the more likely you will be able to obtain such a policy. It is likely that the premium charged will be higher than would be charged for an individual of your age with no health history.

When trying to determine what to look for in a policy for yourself, look for the policy that best suits you.

If you can obtain both individual and group disability insurance, it is preferable to purchase the individual first to maximize the amount of your coverage.

If you are self employed or a small business owner, there are alternatives that will provide an income in addition to an individual disability insurance policy.

Once you have a disability policy, do whatever is necessary to keep your policy in force (in existence). It is difficult for a person with a history of a health condition to replace a disability income insurance policy.

If you are working and think you may be going on disability, start preparing.

If you need to file a claim under a Disability Insurance Policy, understand the procedure before starting the process. If your claim is denied, find out why. Perhaps you can correct a misimpression. If not, appeal.

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