It pays to be an educated consumer, especially when it comes to understanding your disability income insurance. The best way to learn about your coverage is to read your policy’s fine print. Here you’ll find such details as benefit amounts, any exclusions that apply and the criteria necessary to be considered disabled by your insurance company. Arguably, this definition of disability is the most important aspect of your policy because it will govern whether you qualify for disability benefits at the time of need.
The most basic definition of disability is the inability to earn income due to sickness or injury. However, different insurers break down that broad definition into more specific circumstances:
- Own Occupation – Defines disability as the inability to handle the fundamental duties of your own occupation.
- Modified Own-Occupation – Pays benefits if you are unable to perform the substantial and material duties of your occupation and are not working in another occupation.
- Any Occupation – Defines disability as the inability to perform the duties of any occupation.
- Combination – Provides own occupation coverage for a set period of time before changing to any occupation.
- Presumptive Total Disability – Applies to certain catastrophic conditions such as loss of sight, hearing, speech, or use of limbs.
- Residual Disability – Pays benefits if you are able to work part-time but your income has decreased due to disability.
- Partial Disability – Pays benefits if you can perform some, but not all, duties of your occupation.
In addition to understanding your insurer’s definition of disability, you should also know whether your policy provides a reduced benefit if you receive benefits from workers’ compensation, Social Security, or other government programs.
Disability income insurance can be instrumental in helping a disabled person and his or her family maintain some quality of life economically if they are unable to work. But policies are all legal contracts that need to be understood prior to the time of need.