What is Disability Insurance and Do I Need It?
Disability insurance (DI) is a form of income protection that pays you a portion of your monthly income if you can’t work because of an illness or injury. Depending on the type of Disability Insurance, it could cover 60-80% of your income for a set period of time if you are unable to work.
What is a disability? Believe it or not, this is a legal question and not necessarily a medical one. It is important to read and fully understand the definition of disability used by your provider.
This much we can say. Disability insurance can cover short-term and long-term situations.
The most common reasons for short term disability are1:
The most common reasons for long-term disability claims include1:
There are different ways that someone can get disability insurance, e.g., through your employer or through individually-purchased policies; each with its own limitations. We’ll go over some of those options here. If you choose to purchase your own disability policy, and we suggest that you do, Desert Mountain Insurance is an independent broker. That means we can research a multitude of carriers to compare quotes and walk you through the details so you get the coverage you want, you know what is and is not covered, and you understand your policy completely.
Types of Policies
Many people are covered by workers comp through their employer and think that it’s enough. It’s important to remember that while a workers comp policy covers disability, it only covers work-related injuries and illnesses. An injury outside the workplace would not be covered. An individual disability policy will cover you regardless of where or how you sustain an injury as long as you meet the definition of disability within your specific policy.
The Social Security Disability Insurance (SSDI) is another form of insurance that you get through your employer. It’s paid for through your payroll taxes. It can certainly be a help if you find yourself disabled but it may not be something you want to rely on for immediate assistance. Here’s some facts from the Social Security Administration
Some employers also offer disability policies outside of workers comp. Make sure you read the policy well as they may be offering only short-term disability and would not help you should be need something longer.
You can also purchase a disability policy on your own which is the best way to get enough coverage and the coverage that you want.
What Do I Need to Know When Looking for a Disability Policy?
There are several things you should consider when you are looking for personal disability policy:
Purchasing disability insurance is a very personal decision and there’s a lot of information to consider. Give us a call at 480-348-2200 and we can help you understand what is available so you can make an informed decision in safeguarding your future.
1According to the report by the Council for Disability Awareness, “The State of Disability Coverage in America”
2Social Security Administration, Factsheet https://www.ssa.gov/disability/Documents/Factsheet-AD.pdf
3 Social Security Administration, Age Distribution of Pending Hearings, (FY 2015 – FYTD 2019 Quarter 1), https://www.ssa.gov/appeals/ charts/Age_Distribution_Pending_Hearings_FY2019_1st_Qtr.pdf
4 Social Security Administration, Monthly Statistical Snapshot February 2019 https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/2019-02.pdf, Table 1.
`ASPE Poverty Guidelines 2019, https://aspe.hhs.gov/povertyguidelines
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