Disability Insurance Explained
Disability insurance provides income for a worker when they are unable to work. Perhaps the person has had surgery or become disabled because of an accident. They will receive a portion of their income until their benefits are exhausted or they return to work.
Employers and Disability
Worker’s compensation is a form of disability provided by most employers. In this case, it only covers accidents that occur at work. If an employee breaks their foot on the job, then they can receive worker’s compensation. If they break their foot because they trip walking down the street leaving work, then they can’t receive worker’s compensation.
Some companies do offer traditional disability for their employees. For instance, if an employee must miss work to recover from surgery, they can receive disability for a few weeks or months.
How it Works
When you are injured or disabled and unable to work, or must work a different job, then you are eligible for disability benefits. You can start getting insurance payments from your policy based on your income. If you are forced to work a different job that pays less, then your insurance will cover the difference.
There are limits on how long a person can receive disability benefits. Short term disability pays for the first three to six months of the disability. Long term policies are for when you can no longer work at all. These policies start paying after about six months of your disability, and most continue to pay until you are of retirement age or for a lifetime.
In addition to short term and long term policies, there are other specialized forms of disability insurance. Individual policies are an option for people who own a business or are self-employed. Then there are business overhead polices, which pay business expenses if an owner becomes disabled.
It’s important to note that getting disability from the government is different than getting it from your job. Long term disability offered by the government can take months or even years to receive. Because of fraud, the government is strict about who qualifies for disability. You may have to apply several times before you’re approved.
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