Serious accidents and sudden illness can result in lost income which can be devastating to many people and their families. Disability income insurance is designed to replace an income in the event of a disability resulting from an accident or a sickness and is important for people who are self-employed, or employees who have a group plan at work. There are two types of policies: Overhead Expense Income Policies and Disability Income Policies.
Earned income, unearned income, net worth and other sources of income replacement are all considered in determining the amount of coverage that can be offered. Disability contracts are issued between the ages of 18-60, but older clients may have limited access to plan design and benefits. Payments begin after the insured’s chosen “waiting period” such as 30, 60, 90 days or more, and continue until recovery or at the end of the benefit period, usually age 65.
Occupation is the most important feature in a disability contract. Occupation, along with age, sex, health, and income, will affect the cost and the provisions of a disability plan and determine the amount of coverage and benefits available, the type of contract, and the premiums charged.
Policies can be custom designed for professionals, business owners, executives. Policies can also be geared towards the blue-collar worker with some limitations. One popular feature that some providers carry is the “return of premium” benefit which returns 50% of your eligible paid premiums if no claims have occurred. Another feature is the “cost of living” that allows the benefit to stay in line with inflation.