Buying Insurance

Lesson 7: Disability Insurance

Disability Insurance and Workmens Compensation

Most people have a form of disability insurance because of their employment. I refer to the Workmens Compensation laws. Though the details and provisions vary from state to state, these laws have a common general purpose. Namely, they are designed to provide an employee compensation if that employee is injured on the job. There is also Unemployment Compensation. Again, these are entitlements by law which employees can receive if they qualify. (The details of Workmens Compensation insurance and the definition of "employee" are dealt with in the companion to this course entitled: "Savvy Insurance Buyer: Business Insurance".) There are two important points to remember here. The first is that this form of insurance relates to employees. The self employed individual is not automatically covered under Workmens Compensation Insurance. They must elect and pay for this because they are their own employers. Second, Workmens Compensaion is not well designed for the very highly compensated, specially skilled, professional. Moreover, Workmens Compensation pays only for "work related" injuries. If you are cleaning the gutters on your home and fall from the ladder breaking your back, you have no coverage under Workmens Compensation. What all of this means to you is that you will have to assess your own situation and come to your own determination of your personal disability insurance needs.

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