How Disability Insurance Works and Various Types of Coverage

Posted on 13 Nov, 2015

Disability Insurance
 

Disability insurance is another way of describing income protection, disability income insurance or DI. It is a type of insurance that looks after the income that beneficiary’s have worked hard for. It is designed to protect them against risks. These risks may occur to those who have a disability. The disability of an individual may prevent them from completing all of the important tasks they are required to do at work. Disability insurance will cover the individual whilst they are on sick leave. It also comes with both short and long-term disability benefits. Here’s how disability insurance works and various types of coverage that are available to you.

How Disability Insurance Works

Disability insurance came about towards the end of the nineteenth century. It used to be called accident insurance. The Railway Passengers Insurance Company was the first place to provide such insurance. This was opened in England in 1848. It was designed to provide coverage to those who had accidents on the railway system. As the company grew over time, new premium levels were devised. Each level would be charged higher fees. Many of these levels were designed for second and third class travel passengers. This was because some of the train carriages did not have any roofs on them. Here’s how disability insurance works under this program:

Original premium levels for Disability (Accident) Insurance were:

• Individual Disability Insurance
• High-Limit Disability Insurance
• Business Overhead Expense Disability Insurance
• National Social Insurance Programs
• Employer-Supplied Disability Insurance

Individual Disability Insurance.

This particular package was designed for those who had employers who did not provide benefits to them. It was also designed for individuals who were self-employed who wished to claim this cover. This cover provides an individual with extra monthly benefits that would last for a longer time frame. However, payments for this would have to be paid more regularly once a claim had been made. This policy would cover a larger a mount of circumstances. Insurance calculators available online were able to assist with the amount of disability insurance an individual would require.

High-Limit Disability Insurance.

The purpose of this cover was to give an individual up to around about sixty five percent of disability benefits. It did not matter what level of income they had previously earned. This cover was used to provide a supplement to any standard coverage. Benefits from this type of cover would range from around two thousand dollars to one hundred thousand dollars every month. There have been hospitals who have gone up to thirty thousand dollars for a single policy and participation. This was for an individual or group long-term disability.

Business Overhead Expense Disability Insurance.

This coverage was created to reimburse businesses for any overhead expenses they may have. But only if the owner of the business had a disability. Some of the benefits that come with this are: employee salaries, utilities, collection service fees, accounting and billing, mortgage or rent payments, property tax, laundry and maintenance, employee benefits and leasing costs. A range of other similar benefits may also be included in this package.

National Social Insurance Programs.

In countries who are well off, the major form of disability insurance will be provided by the national governments. This is available to all citizen’s of that country. These programs are often used as a safety net for those who do not have any form of insurance. The programs are very large. They also have a wide range of beneficiaries. The benefit is also designed to prevent an individual from going into poverty.

There are five states within the United States that provide funding for Disability Insurance programs. However, these are only for short-term disabilities. The amount of such coverage will depend on how much an individual has earned within the twelve months before claiming the insurance. The states that do this are: Rhode Island, New York, Hawaii, California and New Jersey.

Employer-Supplied Disability Insurance.

Those who apply for this type of insurance have often been injured whilst they are doing their job. This is why this is the second biggest disability insurance that are made available to employees from their employers. There are a wide range of sub categories that may or may not be included in the package. These include: General disability insurance policies and Worker’s Compensation.

There is a lot to consider when thinking about how disability insurance works and what coverage you should get. The professionals at Gustad Law can help walk you through the process and make it that much easier for you.

How Disability Insurance Works and Various Types of Coverage was last modified: December 5th, 2016 by Gustad Law
Categories: Disability

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