Disability insurance is often called the disability income insurance. This is a form of insurance that insures the beneficiary’s earned income against the risk that disability will make working for the beneficiary impossible. Some people have their houses, cars or property insured, but there are also some people who insure their ability to work and their income.
Developed countries provide some form of disability insurance for their citizens. This serves as a safety net for citizens who are uninsured or underinsured. For example, in the United States it is the Social Security Disability Insurance, while in the United Kingdom it is part of the National Insurance.
For government provided disability insurance, it is not very large but is enough to prevent abject poverty. Employers, meanwhile, should also provide for their employees’ disability insurance; since one of the top reasons why people are being disabled is because they get hurt while they are on the job.
There are different types of disability insurance. They are:
- Worker’s compensation offers payments to employees who are unable to work temporarily because of a job-related injury. It is more than just income insurance, because it may pay for economic loss, reimbursement or payment of medical expenses, general damages for pain and suffering and benefits payable to the dependents of workers killed during employment.
- Veteran’s benefits compensation and insurance provided to military veterans are the same as worker’s compensation. Veterans get disability income insurance, life insurance and even mortgage insurance though the scope of each is limited. How? The life insurance, for example, is limited only in providing a small amount for the survivor’s benefits to survivors of veterans killed in the course of their service. It is not a general life term policy.
- Individual insurance policy -for individuals who are self-employed or whose employer does not provide this kind of benefit, they may purchase their own disability insurance. Premiums and benefits available may be different depending on the company, occupation, state and country. For policies giving more monthly benefit on a longer period and giving the benefit immediately or more quickly after the disability, the premium is definitely higher. Premiums are also higher for those policies that define disability in a wider sense, providing coverage for wider circumstances.
But are we paranoid? Are we just trying to picture worse things happening when they really don’t happen? According to the United States Social Security Administration Disability, there are studies showing that a 20-year-old worker has a 3 out of 10 chance to become disabled before retirement age. This, of course, depends on age, general health, and occupation.