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Disability Insurance

Disability insurance coverage is designed to provide replacement income should the policyholder become disabled and unable to work for an extended period of time. Many employers will provide short and long-term plans as part of a benefits package. Employees often can choose one or both disability programs, and the required premium payments can be automatically taken from the employee’s paychecks to ensure consistent coverage.

Long-term disability is defined by an illness that can persist for 12 months or beyond. This type of policy can be often obtained in an employer benefits package and can help employees in receiving their income during a longer period of illness.

Employer-provided disability coverage is often less costly than similar private disability plans, and therefore very attractive. Short-term disability policies can protect the employee should he or she not be able to work for just six months to a year. Workers in a few states such as California, Hawaii, New York, Rhode Island, and New Jersey all have no cost access to short-term insurance plans. The covered individual will generally receive about two-thirds of their normal income in this case.

Any working individual is a perfect candidate for disability coverage. Obtaining disability coverage from an employer (or in other ways) is a safeguard against the financial consequences from any sudden and serious sickness. If the worker’s family relies upon his or her income, disability insurance benefits can ensure that savings will be protected and that bills will continue to be paid on time. Policyholders need not stress about their mortgage, car payments and medical insurance co-pays with this coverage.

In order to receive benefits, the policyholder will need to have a doctor certify that his or her short or long-term condition is legitimate. Should the policyholder have both short and long-term disability policy coverage, it is often mandated that he or she first use up the short-term coverage. Most insurance providers will pay out a cash benefit weekly and will be taxed as regular income.

Though we never know if we will need it, disability coverage can be an excellent tool for financial planning. If we’re unable to work due to a disability, it can result in a catastrophic loss of income. With disability benefits, we can have access to a weekly income and not be financially devastated.