Have you ever thought what will happen to you if by some stroke of bad luck you were rendered disabled? Where will you get your daily living expenses? How will you pay for your medications? Whether it is a temporary or total and permanent disability, you would still need to find answers to these questions.
There are different types of disability insurance and each of these was developed to address some of the common concerns that come up when a person becomes disabled.
Disability Income Insurance
This is also called Income Protection Insurance or Salary Continuance Insurance. This replaces part of the income lost if you cannot work due to sickness or injury temporarily. This ensures that you can continue paying the essential expenses and maintain your existing lifestyle to some extent. When you have this insurance, you will have money to buy food for the family, pay the rent or mortgage and buy the necessary medicines so that you can get better and return to work.
Total and Permanent Disability Insurance
During the early days of insurance, this type of benefit was only offered as a rider to a life insurance policy like term life insurance or whole life insurance. Some companies are now offering this as a stand-alone insurance product. This type of insurance normally provides a lump sum payment if the person is rendered totally and permanently disabled. This normally pays the benefit if the person is unable to return to any kind of remunerative work due to his disability.
The lump-sum payment from this type of benefit can be used to pay for the essentials of daily living like mortgage, food and clothing. It can also be used to help with rehabilitation costs and repayment of debts. Most importantly, this can be invested so that the money can provide an income stream for the person.
Trauma Insurance
Trauma insurance is not as popular as the other disability insurances but is just as important. This type of insurance provides a lump sum payment upon diagnosis of one of the listed dread diseases in the policy document. This is not dependent on the person’s capacity to return to work but mainly on the satisfying the conditions stipulated for a particular medical condition.
Trauma policies can vary and could have anywhere between 5 and 40 specified conditions. The most common claims are for cancer, heart attack, stroke and coronary artery surgery.
This helps ease the financial pressures brought about by the person’s condition. For example, cancer may involve a lot of expenses during treatment but does not necessarily mean that the person will not be able to return to work.