Disability insurance is a form of insurance which covers an insured against risk of loss in income in case insured suffered a disability. The insurance benefits differ based on whether the disability is temporary or permanent. Most disability insurance policies provides for both forms of disability. The premium payment also depends on the kind of disability benefits program the insured has chosen.
Earlier there was a limit on payment of monthly disability benefits which failed to provide financial risk cover to high income groups. The new insurance policies have been designed keeping in view every income group; however, the premium rises with more benefits. There are many types of disability insurance policies and coverage which are explained below:
Individual Disability Insurance: Individuals, who are not covered by employers or for self-employed individuals, can opt for individual disability insurance policy and pay the premium on their own. There are many such policies available in the US market.
High Limit Disability Insurance: This insurance policy is beneficial for high income group individuals since the benefits aims to cover 65% of the income level of the insured.
Key Person Disability Insurance: Disability of key person can bring financial loss to the business. This insurance policy aims to protect the company against any financial loss due to disability of a key person. It gives relief for temporary as well as permanent disability of the key person by covering the cost of hiring a replacement, training, loss in revenue etc.
Business Overhead expense disability insurance: This type of insurance covers the business expenses like rent, mortgage payments, lease payments, salaries, property taxes etc, in the event of disability to the business owner.
Employer’s supplied disability insurance: Employers also tend to provide disability insurance coverage for their employees since most of the disability injuries are on-the-job injuries.
In United States, social security also covers a person against financial loss due to disability under the schemes like social security disability insurance and supplemental security income schemes. This covers any uninsured or underinsured individual. However, the coverage is not high.