Disability Insurance

Disability Insurance (DI), also known as disability income insurance or income protection, is a type of coverage that protects a beneficiary’s earned income in the event that a disability prevents them from performing the essential functions of their job.

For instance, this insurance can help if a worker is unable to maintain composure due to psychological disorders or if an injury, illness, or condition causes physical impairment or incapacity to work. Disability insurance includes paid sick leave, short-term disability (STD) benefits, and long-term disability (LTD) benefits.

In the U.S., a disabling accident occurs every second on average. In fact, nearly 18.5% of Americans are currently living with a disability, and 1 in 4 individuals in the U.S. workforce will experience a disabling injury before retirement.

Types of Disability Insurance

Individual Disability Insurance : This policy is available for those whose employers do not provide benefits or for self-employed individuals who need disability coverage. Premiums and available benefits vary by company, occupation, state, and country. Generally, premiums are higher for policies that offer more monthly benefits, provide coverage for longer durations, and initiate payments more quickly after a claim. Additionally, premiums tend to be higher for policies with broader definitions of disability, as these provide coverage for a wider range of circumstances.
High-limit Disability Insurance : High-limit disability insurance ensures that individuals can maintain 65% of their income, regardless of income level. This coverage is typically added as a supplement to standard policies. Benefits can range from an additional $2,000 to $100,000 per month, with some policies offering up to $30,000 in benefits for individual or group long-term disability coverage.
Key-person Disability Insurance : Key-person disability insurance helps protect a business from the financial impact of losing a key employee due to disability. The benefits can be used to hire temporary staff if the disability is expected to be short-term. If the disability is permanent, the benefits help cover costs related to recruiting and training a replacement, as well as expenses such as loss of revenue, unfunded salary continuation, and more.
Business Overhead Expense (BOE) Disability Insurance : BOE coverage reimburses a business for ongoing overhead expenses if the owner becomes disabled. Covered expenses include rent, utilities, leasing costs, maintenance, accounting services, employee salaries and benefits, business insurance premiums, and other regular monthly expenses.