About Disability Insurance

Conceptually Disability insurance is actually very simple to understand. The various definitions and policy riders available however, are what make a Disability insurance policy so complex. The definition of total disability, which describes the circumstances in which a person is eligible for a claim, can be completely different with one company‘s policy than with that of a second company. It is very important that prior to purchasing disability income protection, you fully understand all of the definitions and provisions available in order to make the best purchase.

So what is Disability insurance and what does it actually do? Disability insurance is a product that allows you to insure a percentage of your income so that if an injury or sickness prevents you from working, you can continue to have a source of income. It is a product that protects you, your family and your future from the possibility of suffering a financial disaster. Unless you are capable of retiring today, you should have Own-Occupation Disability insurance.

The amount of Disability coverage a person can purchase is directly related to how much he/she earns. A very common misconception is that people believe they can purchase as much Disability insurance as they are willing to pay for. The fact is that most people are only able to insure 50-65% of their income, with higher earners usually being capped at the lower percentages. The reason for this limitation on coverage is that insurance companies want you to have an incentive to get better and return to work. Think of it this way: If you were able to receive 100% of your income on a disability claim, would you really be motivated to return to work?