Disability income insurance provides benefits to replace lost income when you – the insured become incapacitated, and unable to work because of illness and/or injury.
Disability insurance benefits are based on a percentage of your income. The more you earn, the more benefits you will be able to collect if you become disabled. As a result, high-income earners present a greater financial risk to the insurance company.
With short-term disability, benefits can be awarded if you are unable to do your job. With long-term disability, benefits will typically only be awarded if you are unable to do any job.
Certain disabilities may cause you to miss work for an extended period but aren’t eligible for benefits under most Disability Insurance policy. These include (but aren’t limited to):
Employee related illness or injury: Workers’ compensation is mandatory accident insurance purchased by employers. Workers’ compensation insurance only applies if you get sick or hurt while performing the duties of your job, as an employee. This is referred to Occupational Injury or Illness. Workers Compensation insurance normally provides benefits to cover medical bills or rehabilitation costs. Workers’ compensation also covers partial lost wages if you miss work. Typical policies also provide death benefits if you’re killed on the job.
We try to keep insurance jargon to a minimum, but there are some terms we can’t avoid. Don’t worry – they’re all pretty simple once you know what they mean.
Your monthly benefit is the amount of money you'll receive each month if you're sick or injured and incapacitated. You can normally choose a monthly benefit based on your level of income.
The typical maximum of disability benefit is 60% of your income and disability benefits are generally tax free because it is purchased with after-tax money.
Your benefit period is the maximum amount of time you'll receive benefits for each approved disability claim if you're sick or injured and can't work.
The typical benefit periods options are either 3, 6, or 12 months.
Your elimination or waiting period is the amount of time you'll need to be disabled before you can start to receive benefits from your disability policy. With a 30-day elimination period, your benefits will begin after you have been incapacitated for at least 30 days, should you continue to be disabled.
That doesn't mean you have to wait for your elimination period to pass before filing a claim. If it's clear you'll be unable to work for an extended period, we recommend that you file or open a claim as soon as it’s medically apparent that you will be unable to work for an extended period. This will trigger the claim processing so you can get paid right after your Elimination Period.