How Does Disability Insurance Work?

Many people have multiple types of insurance for their family, home, and possessions. But what about insurance for your ability to make a living and support yourself and your family? That’s where disability insurance comes in. 

This type of coverage is essential for both employees and business owners. Let’s look at the basics of disability insurance, including how it works, how much it costs, and more.

What Is Disability Insurance?

Disability insurance provides coverage if you get hurt or sick and can’t earn a paycheck. It replaces a portion of your lost income, providing financial security for you and those who depend on your income. 

Disability insurance also provides peace of mind for business owners who wish to provide coverage for themselves and their employees.

How Does Disability Insurance Work?

Disability insurance involves monthly payments to the insurance company. Like any other kind of insurance, you need to make the premium every month to ensure coverage. They will pay you a monthly amount in return if you become disabled and can’t work.

Also called disability income insurance and income protection insurance, this type of policy usually pays 60% to 80% of your income before you became disabled. 

When you file for disability, there is a waiting period—also called the elimination period—involved before you can start receiving benefits. The term in which your benefits are paid out is known as the benefit period, which depends on your financial situation and what other insurance you currently have.

Is Disability Insurance for Life?

There’s no lump sum payment involved with disability insurance. Your benefits can last months, years, or up until you reach a certain age, including retirement. It all depends on your policy. You won’t lose coverage if you change jobs or lose your employment.

Close-up Of A Businessman With Bandage Hand Using Laptop At Workplace asking how does disability insurance work

How Much Does Disability Insurance Cost a Month?

Generally, a disability insurance policy costs about 2% of your yearly salary, which can range anywhere from $30 to $500 a month. It’s usually cheaper to get group-term disability insurance from an employer if they offer it. However, a group plan is contingent on your employment, meaning you’ll lose your insurance if you don’t work for the company anymore.

Is Disability Insurance a Good Investment?

Disability insurance is a good investment for people who work and still need to pay bills if they lose their income due to injury or illness. It’s also a good idea for employers to provide disability insurance for their employees, as it usually includes short-term sick leave. 

While employers don’t have to offer disability insurance (not to be confused with workers’ compensation insurance) by law, many companies do offer it. 

How to Get a Disability Insurance Quote

InsureOne offers multiple disability insurance options to fit your unique needs and budget. Get your free disability insurance quote online, over the phone, or by visiting us today. Our dedicated team is ready to meet all of your insurance needs.