Disability Insurance, often called “DI” or “disability income” insurance, is a form of insurance that insures the beneficiary’s earned income against the risk that a disability may impede a person’s ability to complete the core functions of his or her work. For example, the inability to focus or maintain composure due to psychological disorders or an injury, illness or condition that causes physical impairment or incapacity to work. Benefits encompass paid sick leave, short-term disability benefits, and long-term disability benefits. Statistics show that, in the United States, a disabling accident occurs on an average of once every second. In fact, nearly 18.5% of Americans are currently living with a disability, and 1 out of every 4 persons in the US workforce will suffer a disabling injury before retirement.
Employers, employees, and self-employed individuals who desire disability coverage, may purchase policies. Premiums and available benefits for individual coverage vary considerably between companies, occupations, states and countries. In general, premiums are higher for policies that provide more monthly benefits, offer benefits for longer periods of time, and start benefit payments more quickly following a disability claim. Premiums also tend to be higher for policies that define disability in broader terms; meaning the policy would pay benefits in a wider variety of circumstances. Web-based disability insurance calculators assist in determining the disability insurance needed.
Key Person Disability Insurance provides benefits to protect a company from financial hardship that may result from the loss of a key employee due to disability. Should the disabled employee’s disability appear to be short-term, the company may use the benefits to hire a temporary employee. In the case of permanent disability, benefits may be used to help defray costs related to hiring a replacement, including recruitment, training, startup, loss in revenue and unfunded salary continuation costs.
Business Overhead Expense (BOE) coverage reimburses a business for overhead expenses should the owner experience a disability. Eligible benefits include rent or mortgage payments, utilities, leasing costs, laundry/maintenance, accounting/billing and collection service fees, business insurance premiums, employee salaries, employee benefits, property tax, and other regular monthly expenses.
One of the most common reasons for a disability is an on-the-job injury, which explains why the second largest form of disability insurance is that which is provided by employers to cover their employees. There are several subtypes that may or may not be separate parts of the benefits package such as workers’ compensation and more general disability insurance policies.
At The Merriam Agency, we can help you identify your specific needs and work with Carriers to design and implement a plan that works for you.