Disability income insurance, as with many other policies, is a specialist area within the insurance market. Its purpose, as the name suggests, is to insure a person against the risk of disability limiting their ability to work, either in part or wholly. For example, if part of an employees’ job role entails heavy lifting and they sustain a debilitating back injury, this will only present a partial limitation to his/her ability to continue working within a similar area of employment. However, if their work is reliant upon driving ability and the disability precludes the employee from continuing in this type of work, their ability to continue in this specific type of work is wholly limited. However, before considering whether this type of insurance is needed, there are a number of factors that a person should take into account.
The risk factor itself is the most important reason to consider purchasing disability insurance. statistics indicate that over 18% of people in the US suffer from a work related disability and it is indicated that 1in 4 people are likely to suffer from some form of disability, whether this is psychological, mental or physical before they retire. Based upon these statistics therefore, it is argued that the value of disability insurance is self-evident.
A second factor to consider is how and in what circumstances the disability occurred. If the disability is related to a work related injury, such as an accident, it is likely there is the possibility that one of the benefits the employer provides is disability insurance. If this is the case then there is no need to purchase individual disability insurance. However, if the disability occurred as a result of a non-work related incident, it is likely that the insurance provided by the employer may not cover such events. It should also be noted that no disability income insurance will cover existing conditions.
It is also essential to understand the limitations of the disability insurance cover in terms of the limitations of its benefits. In this respect, there are two main issues. The first relates to the length of time the benefits during which the benefit will be paid. This may be short-term, which usually has a limit of two years, or long-term, meaning benefit will remain payable for the rest of the claimants life. Equally, it is important to remember that, where disability income insurance is provided by the employer, it will lapse if the employee leaves that employment. Therefore, the same factors determining the need for disability income insurance will need to be reconsidered when entering each change of employer.
In summary, therefore, the statistics suggest that disability income insurance cover is important. However, the question as to whether an individual needs to purchase this type of insurance depends upon whether such cover is provided by the employer, whether the disability was work related or not, and the extent of the cover provided. If there are issues in any of these circumstances, then there may be a need for the individual to purchase disability income insurance.