If you have an accident or injury, your health insurance typically helps cover the medical bills. But what if your injury results in a total disability that prevents you from working and you need help paying the mortgage, childcare costs and other daily living expenses? Or, what happens if you get a disabling illness that results in you not being able to work? That's where disability insurance comes in. In contrast to Social Security disability coverage, which has eligibility requirements and a rigorous application process, disability insurance is available to anyone and helps prepare for life’s what-ifs.
Here are the different disability insurance policies and options:
- Short-term disability has a one or three year benefit period and can replace a portion of your monthly income up to a maximum of $3000, based upon your income.
- Long-term disability has a five year up to age 67 benefit period and can replace a portion of your monthly income up to a maximum of $20,000, based upon your occupation and income. As part of this policy, you may want to consider optional riders:
- A cost of living adjustment (COLA) benefit to protect against inflation by increasing your monthly disability payments each year.
- Residual disability riders that continue to pay out in reduced amounts if you're able to work part-time.
- Accidental death and dismemberment (AD&D)
- Social Insurance Supplement Rider (SIS) provides an additional benefit amount. Benefit amount will be reduced proportionally once the SIS benefit is approved.
- 5 Year and to Age 67 Own Occupation option which changes the qualification of a claim so it’s specific to your occupation (if you can do another job, you would still get the benefit).
- And others.
These insurance policies can take the form of a variety of products to help you plan for the unexpected. For example, State Farm® offers:
- Individual Credit Disability Insurance: A type of disability insurance policy that will make payments toward a loan that you're unable to keep up with due to loss of income because of a total disability.
- Long-Term Disability Insurance: A type of disability insurance policy that provides funds to help replace lost income if you become disabled for an extended period of time.
- Short-Term Disability Insurance: A type of disability insurance policy that provides funds to help with monthly debt obligations like car loans, mortgage, rent, and credit cards — or to help replace lost income if you become disabled.