Disability Insurance What Does It Cover And How It Works

Disability insurance can provide a financial safety net if you're unable to work due to illness or injury.

It typically covers a percentage of your income, usually between 50% and 80%, depending on the policy.

The coverage amount is usually tax-free, which can help you maintain your standard of living while you're out of work.

Most disability insurance policies have a waiting period before benefits kick in, typically ranging from 30 to 90 days.

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Disability insurance can cover nearly every type of illness or injury that keeps you from doing your job.

You can receive disability benefits for complications from pregnancy and childbirth, as well as for injuries like broken bones, lost limbs, and nerve damage.

Disability insurance can also cover chronic conditions like chronic fatigue, back pain, and muscle and joint disorders.

Some serious disabilities, like losing sight in both eyes, hearing in both ears, or speech, can qualify for presumptive benefits, which waive the waiting period for payments.

Disability insurance can pay for your regular expenses, including rent or mortgage, groceries, and childcare, if you're unable to work due to an injury or illness.

Here are some examples of illnesses and injuries that disability insurance can cover:

Disability insurance riders can also provide additional benefits, such as rehabilitation coverage, student loan protection, and retirement protection.

Total disability typically means being unable to work at your own job due to a covered illness or sickness.

Disability insurance policies often have exclusions and limitations that may affect your coverage and/or eligibility, so it's essential to discuss the details with your benefits counselor.

You'll need to choose an elimination period, which is the waiting period between the date your physician determines you're unable to work and the date your benefits can begin, and this can impact your premium.

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What affects your disability insurance coverage? Your policy defines a "disability" based on job functions, which can be either own-occupation or any-occupation. An own-occupation policy pays out as long as you can't do your specific job anymore, while an any-occupation policy only pays out if you can't find any work at all.

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Your disability insurance can switch from own-occupation to any-occupation after you get benefits for a few years. This can impact how long you receive payments.

Commonly asked questions about disability insurance include what constitutes "total disability" and which illnesses or conditions may lead to it. Total disability typically means you're unable to work at your own job due to a covered illness or sickness.

It's generally recommended to have enough disability insurance to cover 60% of your after-tax income. However, this number varies based on your monthly living expenses.

You'll need to file a claim with your benefits provider, such as Colonial Life, if your physician determines you're unable to perform your current job. The elimination period, which is the waiting period between the date your physician determines you're unable to work and the date your benefits can begin, can be chosen during enrollment.

Here are the possible elimination periods and their typical premium impacts:

You can also choose from various benefit periods during enrollment. Your benefits counselor can help you determine which benefit periods are available to you.

To start the claims process or check the status of a claim, log in to your account. Filing an eClaim and setting up direct deposit is the fastest way to receive benefits.

Accidental Death and Disability is a type of insurance that pays benefits if the cause of death is due to an accident. It's a supplemental policy that can be used to add extra protection to a regular life insurance plan.

Accidental death insurance policies typically exclude causes of death such as acts of war, death caused by illegal activities, hazardous hobbies, suicide, and natural causes. They also usually exclude death while under the influence of non-prescribed drugs or alcohol.

AD&D policies can pay out a fraction of the benefit amount if the covered employee loses a bodily appendage or sight due to an accident. This can include the loss of limbs, fingers, toes, sight, and permanent paralysis.

There are four common types of AD&D plans: Group Life Supplement, Voluntary, Travel Accident (Business Trip), and Dependents. The benefit amount and coverage can vary depending on the type of plan and the insurer.

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Here are the four types of AD&D plans:

Disability insurance policies often come with optional riders that can enhance your coverage. Some riders are included at no extra cost, while others require an additional payment.

You can add riders to your policy to increase your coverage or add new benefits. For example, the automatic increase rider automatically raises your coverage without requiring another medical exam.

Here are some common disability insurance riders to consider:

Disability insurance riders can provide additional coverage and benefits to help you in times of need. Some common riders include the automatic increase rider, which allows your coverage to increase without needing another medical exam.

The cost of living adjustment rider is another option, but be aware that it can be expensive. This rider increases your coverage to keep up with inflation.

If you're interested in adding more coverage in the future, consider the future increase option rider. This rider lets you add more coverage without needing another medical exam.

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You may also want to look into the guaranteed renewable and non-cancelable rider, which guarantees that you keep your coverage and at the same rate as long as you keep paying your premiums on time.

Other riders to consider include the partial disability benefit, which allows you to collect some benefits if you can still do some of your job, but not all of it, and the rehabilitation rider, which covers the cost of occupational or vocational rehab after a disability.

Here are some common disability insurance riders to consider:

Disability insurance riders can be a game-changer for your policy. They're optional features that can change or add to your coverage, and some of them come at no extra cost.

Automatic increase riders can boost your coverage without needing another medical exam. Cost of living adjustment riders can increase your coverage to keep up with inflation, but be prepared for a potentially higher premium.

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Future increase options let you add more coverage in the future without going through another medical exam. Guaranteed renewable and non-cancelable riders ensure you keep your coverage and rate as long as you pay your premiums on time.

Partial disability benefits allow you to collect some benefits if you can still do some of your job, but not all of it. Rehabilitation riders cover the cost of occupational or vocational rehab after a disability.

Retirement protection riders cover payments you would have made to a retirement fund, like a 401(k) or IRA. Student loan protection riders help you cover your student loan payments while you're not able to work.

Here are some common disability insurance riders to consider:

Social Security benefits can provide financial support to individuals who are unable to work due to a medical condition that is expected to last at least one year or is terminal. This can take several months to process after applying.

One key difference between Social Security benefits and long-term disability insurance policies is that family members may also be eligible for Social Security benefits. Receiving Social Security benefits can affect the amount of benefit you would receive from a long-term disability insurance policy.

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As an employer, you want to provide your employees with the best possible benefits to ensure their well-being and productivity. One way to do this is by offering Colonial Life individual or group disability insurance. This can help protect your employees' livelihoods and lifestyles if they become unable to work due to a covered accident or illness.

Disability insurance can be a valuable addition to your employee benefits package. Many people assume they won't need it, but disabilities can be caused by common illnesses or conditions, such as back and joint disorders, accidents and fractures, cancer, and heart attacks and strokes.

Some states now offer paid medical leave programs, but these may not offer as much coverage as employees might need. With Colonial Life, you can provide your employees with more comprehensive coverage.

Here are some common causes of disabilities that your employees may face:

By offering Colonial Life individual or group disability insurance, you can help your employees focus on their health and recovery, rather than worrying about paying bills.

Social Security benefits are paid to people who can't work due to a medical condition that's expected to last at least one year or is terminal.

Applying for Social Security benefits can take several months to process.

The SSA bases benefits on average lifetime earnings.

Receiving Social Security benefits can affect the amount of benefit you'd receive from a long-term disability insurance policy.

Family members may also be eligible for Social Security benefits.