Disability insurance is an insurance policy meant to protect or provide for future earnings in the unfortunate event that you are unable to work. Although it does not have the same prominence as life insurance, disability insurance and in particular long term disability insurance is as important if not more important that the former.
While many of us are well prepared for long term medical care without the need for disability insurance, our entire livelihood will be in jeopardy if we are unable to continue working for a long time. In short, if you need to continue working to put food on the table, then you need to consider long term disability insurance
If you are on employment, then your short term disability insurance needs are usually covered by your employer. Usually for long term policies, you need to purchase them from a private disability insurance provider. Payouts from these policies are not subject to taxes if purchase individually but will be taxable if the payout comes from the companys insurance policy.
As said there are two kinds of disability insurance short term and long term. Short term policies cover the income of the individual if he is no able to work for up to six months or less. The coverage begins when all medical leave is used up. Compensation is usually about 80 of the last drawn pay but there are some policies which pay up to 100 of salary. On the other hand, long term disability insurance is to provide income to the individual for anything more than 6 months up to retirement age. The insurance policy which is bought from private disability insurance providers can cover anything from 50 up to 100 of last drawn salary. Of course, the higher the compensation, the higher the premium will be.
We can never know what the future will hold or when an unfortunate accident will happened to anyone of us. Disability insurance policies are meant as a safeguard to our future income so both ourselves and our family will be provided for in the future.
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