Disability Insurance Coverage

Disability insurance coverage comes in many forms and policies. The most basic division is between group and individual disability insurance. Obviously, group disability insurance is offered by employers in the workplace. In this case, workers can certainly sign up for this coverage, and then consider additional, individual coverage, which always provides better benefits.

The next fundamental difference is between short-term or long-term policies. Short-term disability (STD) plans usually offer 50-70% replacement of lost income, with weekly benefits of $200 to, perhaps, $2,000. Long-term disability (LTD) plans offer monthly benefits of around $500 to $15,000. Benefits are paid for two years, five years, or to around 65 or 70.

Specialty Forms of Coverage

Specialty forms of disability insurance coverage pertain to business situations. Group long-term insurance is common, and definitely a benefit to employers as well as employees. There is also business overhead expense insurance, which pays a business owner's fixed expenses in case the owner is disabled.

Disability buyout provides for a partner's buyout in case of the other partner's disability. Key man disability insurance covers a business owner's financial loss should an essential employee become disabled. Finally, there is a pension completion disability policy for a wage earner who becomes disabled at an early age, say, 30. This worker would have almost nothing built up in a pension or retirement plan, but the completion plan would allow the worker to collect an added benefit.