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Murphy Insurance2025-06-04 15:54:582025-06-04 16:08:18My employer provides me with Disability Insurance—I don’t need my own | Insurance MythsWhile it’s routine to insure your car, home, liability, and often your life, it’s all too common for people not to take steps to protect their income by securing disability insurance. One reason is that it’s something no one wants to think about happening. It’s also common for people to overestimate the relief that employer disability insurance or social security may provide.
What is Disability Insurance?
Disability insurance, also known as disability income insurance, provides financial protection to individuals who are unable to work due to a disability or illness that prevents them from performing their regular job duties.
What Happens If You Can’t Work?
When a person becomes disabled and cannot work, disability insurance pays a portion of their income as benefits, typically a percentage of their pre-disability earnings. These benefits can help cover daily living expenses such as mortgage or rent, utilities, groceries, and other bills.
There are two main types of disability insurance:
- Short-term disability insurance: This type of insurance provides benefits for a short period, usually ranging from a few weeks to several months, depending on the policy. It typically covers temporary disabilities resulting from accidents, injuries, or illnesses.
- Long-term disability insurance: Long-term disability insurance provides benefits for an extended period, often until retirement age, if the insured individual cannot work due to a long-term disability or illness. Long-term disabilities may include chronic illnesses, injuries, or conditions that prevent the individual from working for an extended period.
Disability insurance policies vary in terms of coverage, waiting periods before benefits are paid, benefit duration, and the definition of disability. It’s essential to carefully review the terms and conditions of a disability insurance policy to understand what it covers and any limitations or exclusions.
If You Became Disabled, How Would You:
- Make monthly mortgage or rent payments?
- Make car payments?
- Pay for food, utilities, and other daily expenses?
- Provide for your children’s education?
- Save for the future?
Some questions to think about, indeed.
A benefit of having disability insurance, in addition to any group disability income protection that your employer may provide, is that your own policy will follow you if you change jobs. An employer-provided policy is canceled when you leave the company. Also, be sure not to confuse disability insurance with workers’ compensation protection employers provide, as they are different.
The best way to protect yourself and those who rely on you is to understand available disability insurance options and what protection you may already have before an accident or serious illness occurs and devise a plan to provide financial support. Your Murphy Insurance professional can help you review what you already have and suggest ways to improve your protection. Contact Us … don’t wait until something happens.
Explanation of Disability Income Insurance Coverages
Unlike workers’ compensation insurance, disability insurance generally covers you for injuries regardless of whether you are on or off the job and whether or not the cause is work-related. After a specified initial “waiting” or “elimination” period after being disabled, disability income insurance pays a specific percentage of your income based on the amount of protection you’ve purchased. Typically, insurance companies provide coverage only up to 60% – 70% of your regular taxable income. When purchasing disability income protection, you will also determine what time period you want benefits to last.
It is essential to be aware that pre-existing health conditions, medical history, and age can affect the cost of insurance and your ability to qualify for long-term disability coverage. If you purchase disability insurance when you’re younger and healthy, you may be able to lock in your premiums, which tend to be lower.
Other Issues to Consider and Understand
- How does the policy define disability, and are there exclusions?
- Does the policy cover both illness and accidents?
- Do you know how long the waiting period is? The longer the waiting period, the lower the premium.
- Will my disability benefit amount adjust for inflation?
- Can you receive partial benefits if you can work but not full-time or in the same capacity?
- Will the disability insurance benefits impact other benefits such as social security, workers’ compensation, etc.?
- How long is the policy term, and is it renewable without requiring a new medical exam?
- Will the premium be fixed, or can it increase over time?
Essential Insights on the Importance of Disability Insurance
Disability insurance is a critical component of financial planning, offering protection against the financial consequences of disability or illness. Whether you opt for short-term or long-term coverage, having disability insurance ensures you can maintain financial stability and focus on recovery without worrying about income loss. Take the time to explore your options, understand policy terms, and invest in disability insurance to safeguard your financial future.
Read Our Disability Insurance Blog Posts
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Murphy Insurance2025-06-04 15:54:582025-06-04 16:08:18My employer provides me with Disability Insurance—I don’t need my own | Insurance Myths
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Murphy Insurance2025-06-04 12:08:042025-06-04 12:10:45My business partners and family can work things out if I become disabled | Insurance Myths