WHAT IS A DISABILITY INSURANCE

Disability is something that always happens to somebody else. We deal with that thought-- it shows a good healthy optimistic attitude. In fact, if one seriously believed he was fated to be one of thedisabled it would be hard to function. Everything we do has some element of danger about it. If we thought we were the one destined for permanent injury it would be hard to force ourselves to fly in an airplane, go on a freeway, turn on our furnaces, use power tools, etc., etc. We would naturally want to avoid the risk of disability, but it cannot be done while we still live a normal productive 20th century life.

WHAT IS A DISABILITY

There are three definitions of a disability commonly recognized by insurers.The "own occupation" definition states that a person is considered for coverage purposes when he is nolonger able to engage in the duties pertaining to the occupation for which he was trained and at which he was previously employed. This is the most lenient definition from the insured's viewpoint. Smile if yourpolicy uses this definition!
The "any occupation" definition is stricter and makes it harder to qualify for benefits. A person must be unable to engage in any gainful occupation whatsoever. This is the definition used to qualify persons for social security disability benefits as well as being found in some private policies.
The "split definition" is really a combination of the other two. Usually the "own occupation" definition is applied to the situation for a period of time and then the " any occupation" definition is used.

This government, through workman's compensation and social security, is the largest insurer of disabled workers. A few states, including California and New York, also have non-occupational disability benefits which provide benefits for relatively short periods of time. Group insurance is another source of disability coverage often provided by employers for their employees.

Individual policies are available for those who are not members of a group or to supplement other coverage. Disability provisions are frequently found in pension and retirement plans and as part of other insurance policies as in auto, homeowners, hospital and life insurance. Read your policies carefully todetermine the existence and extent of any disability coverage you may have missed. The worksheet at the end of this chapter will give you a clear picture of your coverage from combined sources.

The time that occurs between the injury accident or onset of illness and the actual initiation of benefits is referred to as the elimination period. The elimination period for social security benefits is five months. For other coverage the time can carry from as little as seven days for illness and immediate benefit for accident, to a one-year elimination period for both accident and illness! The shorter the elimination period, of course, the higher the cost. Longer elimination periods result in savings on premiums. Benefits can last anywhere from six moths to the insured's lifetime for accident-caused disabilities or to age sixty-five for disability due to illness. That's when pension and government benefits take up the slack.

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