What is Disability Insurance?
Often times people go a great job of insuring their second most-valuable asset: their homes, while neglecting their most important asset: their ability to earn income. Disability insurance is a type of coverage that replaces a portion of your monthly income if injury or illness prevents you from working. It provides financial security for you and any loved ones who may depend on your most valuable asset — your ability to earn a paycheck. You may also hear disability insurance referred to as disability income insurance or income protection.
What does it cover?
Disability insurance covers injuries and illnesses that limit your ability to do what’s expected of you at work. Seems pretty straightforward, right? Well, there are still many misconceptions about what is considered a disability and what isn’t.
For example, what comes to mind when you hear the word "disability"? Often times its freak accidents and rare birth defects. All of those unlikely, tragic events that we believe just can't happen to us.
But this simply isn’t the reality.
More than 25 percent of today's 20-year-olds will experience a disabling event that prevents them from working for at least three months before retirement. And when you consider the most common causes of long term disabilities, it’s really not all surprising. Take a look for yourself here:
- Arthritis
- Back pain
- Cancer
- Depression
- Diabetes
- Heart disease
- Stroke
Yes, you read that right. The Council for Disability Awareness reports that 90% of claims that are filed for long term disability benefits stem from medical illnesses, not physical injuries.
To be clear, this doesn’t mean injuries such as fractures, sprains, and strains of muscles and ligaments are not disabling. What it does mean though is that the scope of disabilities that can prevent you from earning an income is a lot broader than most people realize.