Temporary Disability Insurance

Temporary disability insurance is made available to people when they are not able to work for a period of time, due to sickness or injury. Illness or injury can occur outside of the job – this brand of insurance offers about 40-70% of a person’s base salary. Quite a few people get insured by their employers or their unions. Also known as group coverage, individual policies can be bought directly from insurance carriers as well.

How this Insurance helps:

  • Most temporary disability policies are designed on the same lines – an employer or the policy holder pay monthly premiums to buy coverage. A claim can then be filed if the need arises – most often, it could be a situation like a pregnancy, an accident or illness.
  • To be able to file a claim, this insurance policy requires a doctor’s certificate stating the condition and the length of time one is likely to be indisposed. There is usually a waiting period between the time one takes off from one and the date benefits are received. A certain number of sick days have to be used up as well before the policy kicks in. Once the mandated waiting period is over, the amount of wages due are transferred to the policy holder.
  • Short term policies cover a period of 3 months to a year after which there are no benefits. People may have to switch over to a long term disability policy if the problems persist.

Differences in Policies:

Most policies have a few features in common, but here’s a look at the differences:

  • Defining Disability: Some specify the inability of claimant to perform their own job and others, the inability to work in any job/occupation.
  • Service Period: Most people are eligible to get this facility only after having worked at a job for a particular period, at least a minimum of 6 to 12 months.
  • Waiting Period: Claimants may have to wait for at least 6 months before they can get paid. Policies with long waits have lower premiums. The waiting period varies, so it pays to check around.
  • Benefits: These rates can vary as well, but usually ranged between 40-70% of regular earnings. If one wants a higher rate, the premium will be higher as well.
  • Benefit Period: This type of policy has a built in clause which will let people go back to work on a trial basis and see if they are able to get back. If they cannot manage, benefits are available until they are ready.
  • Changes to premium: There are two main differences – a non-cancelable policy doesn’t permit the company to make changes to premiums or benefits. A renewable policy lets the carrier do so, only in the event that they are changing it for the entire group.
  • Exceptions: Drug abuse, pre-existing conditions, a suicide attempt and a few other situations are not covered. On the job injuries resulting in a disability are covered by worker’s compensation insurance and hence excluded.

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