Income Insurance: Disability policies for accidents or illness

| January 10, 2013

Disability insurance is offered with short-term and long-term plans that normally cover accident and illness whether they are job-related or not.

Part 1 of this series covered basic occupational accident insurance. Click here to read it.

Short-term disability typically will provide benefits for up to 26 weeks based on a percentage of income, with a fixed cap. Long-term policies take over where short-term policies leave off and usually pay benefits for two to five years, but can continue up to age 65 when Social Security and personal retirement savings normally begin.

When it comes to the definition of disability, there two distinct types: <i>own</i> occupation or <i>any</i> occupation. The former means the disabling event occurred while on the job you had – in your case, driving a truck – and that it left you unable to perform your former job.

Any occupation disability means that if you are able to perform another job, you are not disabled. Your normal income is not taken into consideration. If you can be trained to work at another job – even at minimum wage – you probably won’t be able to collect benefits.

True own occupation disability has become harder to find. It’s generally expensive, especially for occupations like trucking that are deemed high risk. Word of caution: Some policies that claim to be own occupation have qualifiers than make them any occupation, so pay attention to the fine print.

With any policy, your monthly premium will be higher or lower depending on the waiting period for benefits to kick in.

Payouts typically don’t start until 30 days after you file a claim; they can go even as long as 180 days. The longer the waiting period, the cheaper the monthly premium. If you are going to buy a policy with a longer waiting period, be sure to have enough savings to get you through until the first payout. Financial planners often advise saving at least three months of income to offset personal or equipment setbacks.