Lesson 7: Disability Insurance
This lesson describes the different types of disabilty insurance. It distinguishes disability insurance from other types of health insurance. It reviews the relationship of disability insurance to Workmens Compensation and Unemployment insurance. Finally, this lesson identifies those who might be the most likely candidates for disability insurance.
What Disability Insurance Is And Isn't
What is disability insurance designed to do? Disability insurance provides a continuing income stream over an agreed period of time in the event that you become disabled and are temporarily unable to work. Although both will involve answering health related questions on the application, health insurance and disability insurance are not the same thing. Health insurance may pay for the treatment of any injury or disease that disables you, but it will not help pay for your ongoing living expenses while you recuperate and before you can return to work. Health insurance is one thing, disability insurance is another. Health insurance pays your medical providers; disability insurance pays you. So called "accident" insurance is also not disability insurance. Such policies pay only for a disability which is the result of any accident and pay for only a short period of time. Most consumers overlook disability insurance simply because they haven't done the math. If your monthly and annual budget requires two incomes, how well and how long could you survive on one, or on none? Hungelmann provides illuminating tables on the probability of becoming disabled three months or longer pp. 272-2.
