Disability Income Insurance
Health insurance that provides income payments to the insured wage earner when income is interrupted or terminated because of illness, sickness, or accident. Definitions under this insurance include:
- Total and Partial Disability reduction in benefits if the insured is found to be partially disabled instead of totally disabled.
- Amount of Benefits many policies stipulate that all sources of disability income cannot exceed 50% to 80% of the insured's earnings prior to the disability, subject to a maximum absolute dollar amount.
- Duration of Benefits length of time benefits will be paid. Some policies will pay benefits for one or two years, whereupon the insured must agree to be retrained for other work. Other policies pay benefits as long as the insured is unable to do the job for which he or she is suited by training, education, and experience (often up to age 65, when retirement programs take over). Some policies pay lifetime benefits.
- ELIMINATION PERIOD (Waiting Period) period beginning with the first day of disability, during which no payments are made to the insured. The longer this period, the lower the premiums.
- Physician's Care the insured must be regularly attended by a legally qualified physician because it is necessary to assess changes in severity of disability.
- PREEXISTING CONDITION if an insured has a preexisting injury, sickness, or illness, most policies will not pay income benefits either for the duration of the policy or until a period of time (usually from six months to one year) has elapsed.
- Recurrent Disability most policies will not pay income benefits to an insured who is experiencing a recurrent disability unless the recurrent disability is deemed a new disability. Some more progressive policies define a recurrent disability as a new disability if there has been a break of at least six months between the first disability and the current disability, and the insured has returned to work during that break.
- RESIDUAL DISABILITY many policies pay for the unused portion of the total disability period, limited to age 65.
Popular Insurance Terms
Insurance in which most of the premium (generally 80 to 90%) is invested in traditional fixed income securities. The remainder of the premium is invested in call option contracts tied to a ...
Amount charged to an insured that reflects expectation of loss for a covered risk; and insurance company expenses and profit. ...
Intentional damage or destruction of another person or business's property. Insurance can be purchased by the owner of the property to protect against this exposure. ...
Coverage for dispensers of alcoholic beverages against suits arising out of bodily injury and/or property damage caused by its customers to a third party. Establishments covered include ...
Employee benefit plans under which both the employee and the employer pay part of the premium. Contribution ratios vary. For example, an employer contributes two dollars for every dollar ...
Derivative representing a legal obligation to carry out a transaction that has been prearranged according to a stipulated price and date in the future. There are numerous types of financial ...
Action by the owner of a cash value policy to relinquish it for its cash surrender value. Since the depression of the 1930s, companies have reserved the right to delay payment of a cash ...
Consideration should be given to a company's capacity to underwrite a particular risk, as indicated by its financial standing, claims philosophy, price structure, agent representation, loss ...
Annuity contract. If the annuitant dies before receiving income at least equal to the premiums paid, a beneficiary receives the difference in installments. If the annuitant lives after the ...
Have a question or comment?
We're here to help.