How Does Disability Insurance Coverage Work?

Do you have enough insurance to protect your family and finances in the event of a sudden health crisis? Most Americans focus on what is probably the most important insurance coverage against medical emergencies — health care coverage. But what happens once initial treatment is done and your health insurance has done its job? 



If you are permanently injured, you may be left unprotected unless you have the additional help of disability insurance. How does disability insurance work, and what can you do to get the coverage you need? Here are a few answers. 

What Is Disability Insurance? 

Like life insurance or auto insurance, disability insurance aims to provide monetary assistance in the event of a particular type of emergency. In this case, it's an emergency that leaves you permanently or temporarily unable to work due to an injury or illness. Health insurance covers the costs of getting treatment for a health problem, but disability insurance's goal is to replace your lost income itself.  

What Are the Types of Disability Insurance? 

Disability insurance comes in a few distinct types. The most obvious is short-term coverage and long-term coverage.  

Short-term coverage includes a specified period of time during which you can receive benefits. This is often limited to 60 or 90 days, for example. There is a short waiting period — often around 7 to 10 days — before you get the benefits from this coverage. 

Long-term coverage provides benefits until the disability ends. It has a longer waiting period, though — perhaps 30 to 60 days — and replaces a lower percentage of your income.  

You will also need to decide whether your insurance should cover you only if you're unable to perform any job. Own occupation insurance policies provide compensation if you can't do what you normally do for work. However, any occupation policies only provide compensation if you cannot do any kind of work. This policy is less expensive but is more difficult to claim.  

How Can You Access Disability Insurance? 

Americans have a few choices when it comes to buying or signing up for disability insurance. Some sources are available to all and some are limited by your employment.  

First, Social Security does provide a long term disability benefit known as Social Security Disability Insurance (SSDI). All individuals who pay into the Social Security system potentially have access to this type of insurance. However, in reality, SSDI is notoriously difficult to get approval for and often comes with minimal payments that are insufficient. Most workers should not rely solely on this possible source of coverage.  

The second place to look for disability coverage is through your employer. Some employers offer insurance coverage partially or fully subsidized by the company. This is probably one of the least expensive options for workers, but it cannot be customized. Long-term group coverage or short-term policy offerings are designed by the employer to meet the general needs of employees.  

Finally, most Americans can purchase their own individual disability insurance policy. This is ideal if you want to set your own terms for coverage. An insurance agent helps you shop for a policy that fits your needs, and you would then usually be asked to take a physical exam and answer some questions about your lifestyle choices before receiving approval. 

Where Should You Start? 

Because there are a number of choices, and most workers aren't very familiar with the disability insurance system in the United States, you should begin by meeting with an insurance agent. The agent can explain your options and how they differ in both coverage and price. If individual coverage is your best route, they can also help you shop around.  

At Illinois Insurance Center, we understand the complex world of insurance coverage. Make an appointment to learn more about this vital — but often forgotten — coverage type.