Disability Insurance, sometimes also called disability income or disability security is a type of insurance that covers the earning income of a beneficiary against the possibility that an injury creates a financial barrier for the beneficiary to continue the essential core activities of their employment.
There are several types of disability insurance available.
The type of disability policy you purchase will depend on your age, health condition, and amount of income. The types of disability insurance policies also vary according to the beneficiaries they provide coverage for.
You should determine which type of disability insurance best meets your individual needs and your budget before shopping for disability insurance.
The Social Security Administration administers the federal disability insurance program, providing benefits to people who can’t work because of a physical or mental impairment that prevents them from performing the basic activities of life.
Social Security Disability Insurance pays benefits to people who can’t earn wages because of a physical or mental impairment that prevents them from working.
In the United States, Social Security Disability Insurance is supplemented by state programs; however, the federal program is the largest.
State disability benefits are typically lower than the national benefit level. The difference is usually explained by the kind of work a person performs. Most states require at least 20 percent of a job description to be covered by state disability benefits.
A person who works part-time or freelance can usually be eligible for state benefits; however, they must prove that the amount they earn (less than the state maximum) covers their actual expenses and require assistance with some of their basic expenses.
Once a person is accepted into the program, they are guaranteed coverage until they leave the country.
Medical underwriting is the process of determining whether an applicant is eligible for benefits based on their medical information.
Most applicants must pass a medical exam before being considered for disability insurance. Some medical conditions that are considered are cancer, HIV/AIDS, diabetes, kidney disease, epilepsy, blindness, chronic heart disease, and cancer.
People must also pass a special test in order to determine their “safe” income level, which is different from their “undefined” income level.
Private insurance plans offer a slightly higher income safety net than Social Security Disability Insurance.
Private disability insurance plans typically include a combination of income supports such as Supplemental Security Income (SSI) and Temporary Assistance for Needy Families (TANF) programs. SSI pays benefits to disabled workers and their families; TANF provides income support for people who are eligible for temporary assistance under welfare programs.
Both of these programs are designed to supplement the federal disability insurance program. An individual may need to apply for both SSI and TANF.
Both of these disability insurance programs share common benefits categories such as medical assistance, workers compensation, and income supports. SSI pays benefit levels to unemployed workers and their families; however, TANF only pays benefits to people who are eligible for Medicaid, either through state or federal programs. In addition, both SSI and TANF provide income supplements to disabled workers and their family members.
SSI is the more commonly used disability insurance program. The choice to use one or the other is based on an individuals’ financial needs and life expectancy.
Social security disability insurance offers many safety nets by providing income and medical coverage. However, SSI only pays benefits to people with a low income, while TANF offers many more benefits at higher income levels. The type of income you have and your life expectancy will affect how much you qualify for in Social Security disability insurance.
High premiums are required for those who qualify. Also, if you become disabled while working, you may not be able to qualify for Social Security Disability Insurance at all, depending on your work history and how long you have been disabled. Therefore, it is important to talk with a qualified disability insurance broker.
They can provide information about the program and help you compare plans.