No one expects to be disabled, but it’s vital that you prepare for the unexpected as best you can. Disability income insurance is one of the ways you can do so. Here are four facts about disability income insurance.
1. Private versus Public Coverage
Disability income insurance may be a private benefit or a public one, depending on your employment and financial situation. The public version falls under Social Security benefits and is funded by the federal income and payroll taxes, as well as some other federal and state funding programs. This program is run by the Social Security Administration and various agencies within each state. Private coverage is generally provided by the insurance carrier your employer contracts and may vary depending on the provider.
2. Disability Requirements
The requirements to receive disability benefits will depend on the type of coverage you have. Generally, you will need to wait up to five months before you qualify for disability benefits, whether you have private coverage or will be receiving Social Security benefits. You also need to have a proven work history to qualify, typically at least a sustained five year period of time before you became disabled. If you don’t expect to be permanently disabled, there will be other requirements, such as an estimate of the length of time your recovery will take.
3. Demographic Changes
Disability can occur to anyone, but over time there have been demographic shifts in who tends to receive such benefits. As women became more permanent and long-term members of the workforce throughout the twentieth century, they caught up with and eventually surpassed men as disability income insurance recipients. Likewise, as the baby boomer generation is a relatively large one, they have taken the majority of social security and private disability income insurance benefits as their generation has aged.
4. Timing of Purchase
If disability income insurance is available to you through your employer’s coverage or another source of private insurance, it’s a good idea to purchase it as early as you can. This type of insurance tends to be based on your age, so purchasing it when you’re able-bodied and relatively young can benefit you in the future.
Everyone hopes that they’ll get through life remaining perfectly healthy and fit, but that doesn’t always happen. Disability income insurance can be a good tool to ensure your financial safety in case you do experience disability, particularly when employed in combination with other tools.