Disability Insurance Plans

People work so that they can be financially stable to support their lifestyle. Any illness or injury which prevents an individual to perform a job for a short duration can cause a slight disruption to his/her income. However, a long term illness or injury that can occur at any time can cause any individual’s financial breakdown if he/she is not prepared for it. Disability income insurance plans are the best defense for these scenarios.

A disability income insurance plan ensures that part of the income would be given to an individual even if the said individual becomes unable to perform work because of an injury or an illness. This type of insurance policy is great to have since nobody can really know for sure when an accident or an illness may strike. However, people should think about the different considerations when deciding to choose the best disability income insurance policy for them.

There are basically two main forms of disability income insurance policy plans, namely; the employer-sponsored, and the private-sponsored. Both policies have their advantages and disadvantages brought about by how these policies perceive what disability means to them. Individuals should take note on the different definitions of the term “disability” for the insurance providers so that they would know if the type of coverage that they would be having.

Employer-sponsored disability income insurance policies or “group” policies may offer individuals the least expensive premiums and would give Gainful Occupation Coverage to individuals as long as they remain with the employer. However, an individual should take note that in order for the insurer to consider him/her totally disabled, “disability” should meet the definition as prescribed by the Gainful Occupation Coverage. The definition of “disabled” is that the individual should have an illness or injury that would make him/her unable to perform the material and substantial duties or his/her occupation, or any occupation for which the individual is deemed reasonably qualified by education, training, or experience. With this type of definition, it is the insurer who determines if the individual is deemed disable or not.

Privately-sponsored disability income insurance policies offer individuals with policies that have higher premium costs than that of group policies. However, they may give a better coverage since their definitions of when an individual is totally disabled and can qualify for payouts are better than that of the Gainful Occupation Coverage. Privately-sponsored disability policies have two working definitions of “total disability”.

Under the Own-Occupation Disability Insurance Coverage, an individual is deemed to qualify under “total disability” if he/she is unable to perform the material and substantial duties of his/her regular occupation. In this type of coverage, the insurance company will assume that the individual’s occupation is the one that he/she is engaged in at the time of the injury and illness and will honor the claims of the individual even if the individual is able to work in some other capacity. This definition of total disability makes it possible for individuals to get their disability insurance claims for the jobs that they cannot perform anymore while still being able to supplement themselves financially with other jobs that they can still do.

The last type of coverage is the Income Replacement Insurance Coverage which defines “total disability” as an individual being unable to perform the material and substantial duties of his/her occupation and is not engaged in any other occupation. This definition is somewhat similar to the definition of the own-occupation coverage however; the individual should not be engaged in any other occupation in order to be qualified for receiving his/her disability insurance claims. This disability insurance policy would basically penalize an individual who has been deemed to be totally disabled if that individual would choose to work.