Disability Income Insurance
In the event of a devastating accident, could you rest knowing that your family is going to be taken care of? That's the question on every disability income insurance customer's mind. When accidents happen, either in healthcare or in the professional world, it's important to know that your family and loved ones are going to be taken care of, with routine and regular financial assistance and support.
This is the premise behind disability income insurance – a form of support-based income insurance that allows people who have been disabled to the point where work is no longer possible to claim a level of financial support that allows them to support their family and themselves. Build similarly to life insurance and other financial support services, it's an important service for almost everyone.
Yet it's, unfortunately, one that's passed over time and time again in favor of other insurance policies and options, many of which are only fractionally as important. Whether due to ignorance of the total value of disability insurance – as is often the case with those covered by life insurance – or because of limited attention, disability insurance is frequently ignored in favor of other insurance policies.
Let's look at some of the situations in which disability insurance is an essential service. For people that work in high-risk industries, such as the construction industry, or any industry that requires an extreme amount of travel, the chances of injury during work are relatively high. For the most part, these risks are covered by employers, leaving employees able to claim as part of a larger policy.
However, injuries and accidents that occur outside the bounds of a company insurance policy might not be covered under an employer-backed life and disability insurance policy. As an example, a car crash or other accident that occurs outside of an employer's premises could result in a debilitating or paralyzing injury – one that prevents the subject from ever working professional again in their life.
In many cases, this leaves someone – alongside their entire family – without a source of income for the remainder of their lives, with the exception of limited relief from a government agency. This is a position that few families wish to be in, particularly when they previously believed that this type of accident would qualify for coverage under a life insurance policy – an assumption that's rarely true.
This is where disability income insurance can come in, quite literally saving a family from the risk of bankruptcy or financial distress due to an accident or injury. Disability income insurance can be purchased as one of two services, or as a combination of the two. The two different types – income and personal expense-based – allow customers to choose based on their own financial demands.
The first – income-based – offers continual financial support at a level that's consistent with the type of income that someone is earning independently. It's effectively a 'replacement income' for people, families, and couples that have been affected by a disability. A monthly payment, generally similar to their previous monthly income, is made, allowing them to live a normal life in financial terms.
In most cases, this is the most common form of disability insurance, and the option that the majority of customers align with. It's a simple option that keeps families and individuals operating on a fairly even level, as their income remains relatively unchanged. The second option, expense-based, differs in a number of ways, resulting in a significantly different result for those that choose to purchase it.
Expense-based disability insurance income provides support based on the expenses someone who has been disabled or made unable to work may encounter. While an income-based policy provides compensation based on previous income, this option is related to consumption costs. A selection of countries use this as the basis for their public disability relief systems, due to its relative simplicity.
Generally speaking, insurance policies of this type are less expensive to purchase than their 'all-in' type alternatives. Despite this, they tend to offer less overall value and support for those that need their support the most. Expenses can change dramatically over time, which can affect a policy in a number of ways, including unforeseen expenses, heightened bills, and long-term currency inflation.
The second form of insurance is also often referred to as 'mortgage disability insurance,' as its main purpose is to allow disabled homeowners to keep up with their mortgage payments. The possibility of losing a home or other property when disabled is very real, and it's one that occurs thousands of times annually. This type of service allows you to protect yourself and your family against it.
Disability income insurance is available from a wide variety of insurance companies, including all of the major US insurance providers. Small companies may also offer disability income insurance, although it's worth looking at where it's coming from. Quite often, the type of insurance offered by smaller companies is merely a larger company's services being brokered, often with added margins.
While it's daunting, and even quite scary, to think about the situation in which disability insurance may be necessary, it remains a service that most of us need to invest in. As with all insurance, it's a purchase that benefits from research. Speak with multiple agents and find a solution that's right for yourself, your family, and the people in your life that are most dependent on your income.