Most people stay focused on the types of insurance they’re required to have, like health and car insurance. But there are other types of insurance policies that can be equally beneficial. For example, what if you’re injured away from work and can’t perform your job duties for a period of time? Would you have enough money in your savings account to get by without income? Disability insurance can help you keep earning while you’re out of work.

What is Disability Insurance?

Disability income insurance is a type of insurance policy that protects your paycheck in case you can’t work. There are stipulations in each policy that outline what types of injuries or accidents are covered and what percentage of your income you will receive. Policies might cover anywhere from 50-80% of your normal paycheck.

These policies don’t cover all of your regular income because the insurance companies want to provide an incentive for policyholders to return to work. The plans are, however, designed to help you continue paying your bills and putting food on the table while you’re out of a job. Things typically covered in these plans include broken bones, hospital stays, outpatient operations and even maternity leave.

How the Policies Work

Disability policies work similarly to most insurance policies. You’ll pay a monthly premium to keep the policy active. These amounts are typically less than plans like health and auto insurance, but exact prices vary by person. After your policy is active, there’s a waiting period before you can claim benefits. This might be as little as 30 days or as much as six months, depending on the policy.

The other two parts of a policy are the benefit and the benefit period. The benefit is the amount of money you’ll be awarded if you make a claim that’s approved. (This is the portion of your income you’ll be receiving.) The benefit period denotes how long you can keep receiving that money. Most disability policies include a fairly long benefit period, but they cannot exceed 18 months.

Claim Qualifications

Every insurance company will have its own standards for what is considered a disability. To receive any benefits from your policy, you will have to meet those standards. Be sure to read your policy documents closely or ask your agent questions about what conditions and situations are covered.

Disability insurance isn’t the first policy many people think about, but it can provide much-needed assistance if you can no longer work.