How Does Disability Insurance Work

September 27, 2023

Most people will face a severe illness of some sort during their life. Some diseases may be temporary and overcome with treatment, such as cancer which is treatable with radiation. Some conditions may be chronic and incurable, such as multiple sclerosis, affecting the ability to perform daily activities.

While the likelihood of having this type of illness is not high, some people purchase disability insurance. The policy helps financially protect people when they are stricken with a disease that temporarily or permanently makes it impossible for them to work.

Disability Insurance Explained

This policy provides money to the policyholder as long as they are disabled. It may also work if the policyholder becomes partially disabled. That will apply, for example, if the person loses the ability to use one arm or has lost sight in one eye.

An insurance agent can help with the purchasing of this type of policy. The person might also purchase the policy from the company offering the insurance. This type of insurance is generally affordable and available to fit most incomes.

How It Works

Disability insurance shields you from the risk of being unable to work physical disability. If you become disabled, you will file a claim with your carrier, who will review your claim to determine whether you are eligible for benefits. If approved, your insurer will provide you with a monthly payment that substitutes a percentage of your income, typically between 50% and 70%.

Types of Disability Insurance

The amount of income replacement policyholders can receive and the duration of their disability benefits are determined by their policy and the type of disability insurance they have. 

Here are the three common types of disability insurance:

  • Long-term insurance can supplement other coverages and last two years or until a policyholder retires.
  • Short-term insurance is typically tied to the employer and lasts between three and twelve months.
  • Social Security insurance is generally free but extremely difficult to obtain.

How to Apply for Disability Insurance

This type of insurance is available in some employee benefits packages. Such policies are common in jobs where employees face a high risk of being hurt. Police officers or firefighters are good examples. 

Your employer may allow you to purchase additional disability insurance to supplement your current coverage. If not, you can supplement it by buying a separate individual disability insurance policy. If you have an employer-sponsored disability insurance policy, find out if you can keep it if you leave your job and how much it would cost.

You can purchase your own if your employer does not provide disability insurance. The insurance department in your state can direct you to insurance professionals who sell disability insurance. 

Working with an agent can assist you in determining the amount of coverage you require based on your assets, other types of insurance, and potential sources of income.

Victoria Berezhetska

Victoria Berezhetska is a Content Lead at and an expert contributor to CoverExplore. She has a Bachelor of Science degree in Business Administration, with extensive working experience as a PR specialist and content writer. At CoverExplore, she helps customers find the right educational material through easily digestible blog posts and buying guides backing their insurance coverage choice. Victoria covers diverse topics around digital and insurance marketing, including auto, home, health, and life insurance.

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