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Types of Disability Insurance

January 17, 2012

disability insuranceDisability insurance is an insurance program that pays you if you become disabled and cannot work.  If you support your family financially, you may wonder what would happen if you were unable to work for an extended period of time.  If that describes you, you should look into disability insurance to protect yourself and your family in the event of an injury or prolonged illness.

There are three major types of disability insurance. There is federal disability insurance offered through the social security administration, disability insurance offered through your employer, and private disability insurance through a broker.  All three sources of disability insurance provide different advantages and choosing one or a combination of the three can be difficult if you don’t understand the differences between the programs.

Disability insurance through the social security administration

United States Citizens who have a social security number are eligible for coverage through the social security administration.  There are no premiums or enrollment forms to be included in this social program.  This program is geared towards people with permanent or long-term disabilities.  It is generally harder to file claims and get claims accepted through social security than through employer sponsored or private disability insurance.

Disability insurance through your employer

Many employers offer disability insurance to their employees for free or at a significantly reduced rate.  Disability insurance through your employer is usually divided into short-term and long-term disability, and some employers don’t offer both types.  Policies vary, and employers choose the type of insurance they offer to employees.  Usually you are required to sign up for this type of benefit, so inquire with your employer about the availability and cost of their insurance.   If you work less than full time, you may not qualify for your employers disability insurance benefits.  Temporary workers and anyone else who does not qualify for employer health insurance programs are also usually not eligible for disability insurance programs through their employer.  The current economy has prompted more employers to reduce costs by cutting benefits and restricting access to benefits for temporary and part-time employees.

Disability insurance through private insurance

There are several private disability insurance providers.  If you don’t know of any private disability insurance companies, you can find one by asking a representative with your auto insurance or home owners insurance companies.  Sometimes, private disability insurance can be purchased through a company you already use, which may make you eligible for a multi-policy discount.  If they don’t offer disability insurance, they will be able to recommend a company to you that does. Once you’ve found a disability insurance policy, all you need to do is enroll and enjoy the peace of mind that comes with being prepared in case you are unable to work for an extended period of time.

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