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It is income paid to you weekly or monthly when you can not work because of sickness or injury. The pay out provided may be stated as a percentage of income or as a set dollar amount. The policy defines how much you will be paid, how soon after you are disabled payments appear in your mailbox, and when they will cease. Benefits periods may depend on whether the disability was caused by an accident or illness. The longer the benefit period, the higher the premium will be.
How is disability defined?
Individual policies commonly use one of two definitions of "disability".
One definition is that you are unable to perform your own occupation ("own-occ" policies) – the job you were doing before disability or illness. A variation on this theme is the modified "own occupation" policy that covers you for your own occupation so long as you are not gainfully employed elsewhere.
The second definition, much less attractive to the purchaser, defines disability in terms of your inability to perform any occupation for which you are suited by education and experience.
The distinctive between the major forms can be critically important. For example, if a surgeon loses a hand, s/he may not be able to do surgery. If s/he has an "own occupation" policy, s/he would be able to recover, even though she was able to work as a doctor in a non-surgical field. With the inability to perform any occupation, there would be no recovery, even if the surgeon could only be a tour guide
I am not glowing with health. When am I considered disabled or ill?
It is all laid out in the disability plan, in the definition of "disability". The definition is critical to receiving an insurance check in the mailbox.
Not surprisingly, the definitions of disability vary greatly from policy to policy. Each company uses its own definitions. And the same company may use different definitions in an individual policy than in one of its group policies.
Some insurers require "total and permanent disability" before writing a check. Others provide, or make available, on an optional basis, a "partial disability" benefit paid while you are recuperating or returning to work part-time. A few provide coverage for "temporary" disabilities.
Common more in individual policies than employer-covered group policies are "any occupation" and "own occupation" coverage, both discussed in the preceding paragraph. Some policies will pay for the costs of education or occupational rehabilitation as you retrain. Some policies adjust benefits to take into account any Social Security payments; a few do not. Almost all policies limit or refuse coverage for disabilities caused by suicide, drug addiction, or alcoholism.
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