At least four different types of disability insurance are popular in the United States. Most workers are familiar with workman’s compensation that employers in most states are required by law to provide for their employees. There is a simple type of disability insurance that pays you for specific injuries. The last two are sometimes combined and sometimes sold separately. They are the partial and total disability insurances.
Workman’s compensation is very specific in that it only applies to employees of a given company. If they are hurt on the job whether working or just on the premises, this insurance usually kicks in to pay. The idea behind it is to cover medical bills and to reimburse lost wages due to the injury.
Normally, it is resolved with a settlement or judgment depending on the severity of the injury and how life changing it is. When the settlement or judgment is reached, all payments made to that point by the insurance company are deducted from the total.
If you received $100,000 and the insurance company had already paid out $20,000 in lost wages and $40,000 in medical expenses, you would receive a check fro $40,000. If you hired a lawyer, those expenses may come from your part or be paid by the insurance company depending on what agreements were reached.
Some privately purchased policies pay you a flat amount for specific injuries. If you lose a leg, you might receive $10,000. Sometimes these policies pay double or more if the injury was on public transportation. Once you are paid according to the policy, your benefits are complete.
Depending on the type and severity of an injury, you may be totally or partially disabled for a time or for the rest of your life. Disability insurance policies are structured to pay for one or the other or both depending on what you choose to buy.
Most disability insurances require multiple doctors’ statements to verify your disability. If it is considered a permanent disability that prevents you from returning to the workforce, you will receive compensation for a set time. This will allow you time to file for Social Security benefits to replace the insurance payments.