Disability income insurance provides income to an individual whose earnings have been impacted due to an accident or illness. If you're an individual employee, disability insurance may help replace part of your income until you get back on the job. If you're a business owner, coverage may help pay day-to-day operating expenses if you're unable to work. It also helps provide funds to purchase a disabled partner's share of a business through a buy-out agreement or compensate for profits lost and expenses incurred if replacing a disabled key individual.
Disability income insurance is typically identified as one of three variations - partial disability, recurrent disability or total disability - and is designed to replace part of your income until you are able to return to work.
Generally, partial disability pays a portion of the total disability benefit to you if you are unable to perform one or more of your occupational duties because of disability. This provision is built into some disability policies or is available as a rider with others.
Recurrent disability describes situations where a disability occurs, you recover for a short period of time, then experience a recurrence of the same or related disability.
Usually, "total disability" considers you totally disabled if you are unable to perform the important duties of your occupation due to injury or sickness, aren't working in another gainful occupation and are under a physician's care.
Definitions of types of disabilities and coverage provided vary according to the provisions of a particular disability income policy.
Long term care insurance can provide added reassurance in the event of a disabling illness or injury. Likewise, individual life insurance can help you plan for your future, making sure you have enough income to provide for loved ones or even the continuation of a business after you're gone.