What is Disability Insurance?

June 29, 2017

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Lauren

Lead Copywriter

If you’ve come to this page, it’s probably because you searched for the term “disability insurance.”

In this blog post, we will review what disability insurance is and why you’d want to buy it.

What is disability insurance?
Disability insurance is insurance that provides you with payments if you’re unable to work. According to National Association of Health Underwriters, disability insurance should cover 45 to 65% of your gross income.

Say you get into a car accident and you’re unable to work for six months. With disability insurance, you will receive payments for the time you’re unable to work. How much payment you receive and when you’ll receive it all depends on your plan.

What types of disability insurance plans are there?
You can purchase either short or long-term disability insurance. Short-term disability insurance will pay for the first few weeks or months you are out of work, while long-term disability insurance will pay out a lot longer, potentially for the rest of your life. Long-term disability and short-term disability is sometimes offered by your employer, so it’s important to ask your HR person.

How much does disability insurance cost?
Like most insurance plans, the amount you pay each month for your plan depends on your age and gender. For a man or woman in their 30s who makes $50,000 a year, a disability plan will typically range from $40-$70 a month, while a man or woman in their 50s who makes $50,000 a year will pay anywhere from $70 to $110 a month.

Why would I want to buy disability insurance?
As the New York Times points out, you should look at disability insurance as “income replacement insurance.” If you’re in a situation where not being able to work would greatly impact your family, disability insurance is a smart consideration. Remember, health insurance only covers your medical bills. Disability insurance is also good for families who are planning on getting pregnant. It can be used while the mother is on maternity leave and not working.