Disability Insurance is another type of insurance which insures the earnings of the insurance beneficiary against any risks of becoming disabled. In case an accident happens to a person and he or she becomes disabled, Disability Insurance comes as a right choice.
Disability refers to loss of the working ability due to some prolonged illness or accident. Disability insurances can be found on both long term and short term basis. It has been found that nearly 12% of the American adult population develops a long term disability.
According to the terms and conditions of disability insurance, the insurer pays a lump sum amount to the policy holder when the beneficiary becomes unable to earn his livelihood. The person may be suffering from prolonged illness, poor health, accident or injury and in that case Disability Insurance is important.
There are short term disability insurance and long term disability insurance for people. Short term disability insurance covers temporary illness or injury whereas the long term insurance covers a person till the age of 65. This is the most popular choice of disability insurance with people all over the world.
Based on the premium paid, the disability benefits can either be taxable or non-taxable. The short term disability insurance pays a stipulated amount which is generally up to 66% of the salary for 13 to 26 weeks. Short term disability insurance is also ideal for maternity and accident cases.
If the insurance beneficiary dies while receiving the payments, the survivor benefits will be paid as a lump sum to the eligible survivor on providing the authentic proofs. It has been surveyed that about 4 million Americans have disability insurance and most of them are white collar professionals.