Various surveys suggest that 25% of the people who are currently in their 20s will be unable to work or become disabled before that can reach the age of 67. But there are insurances apart for dental, medical and vision insurances which help those people by replacing a portion of their salary for the time they become disabled or ill and can no longer work. This kind of insurance is known as disability insurance. As the name suggests, the insurance is provided when the employee is disabled or ill and cannot work any further. For most part, disability insurance will not replace the entire employee’s salary but only a part of it. Instead, disability insurance ensures that the employee gets at least 60% of their salary after they are unable to work. Those payments usually go up to the cap or monthly payout. Although it is not ideal, but it is better than receiving nothing, especially when the employee is the only earning member of the family. People might confuse this with worker’s compensation insurance but these are not the same.
Difference between Health Insurance and Disability Insurance
The worker’s compensation insurance provides benefits like partial wage replacement when the employee gets hurt while working for a particular company. However, disability insurance provides partial wage replacement to the workers who are disabled or ill and cannot work any longer. In easier terms, health insurance benefits enable the employees to seek the required medical care when necessary whereas disability insurance enables them to still earn when they cannot work due to any disability or illness.
Long Term vs. Short Term Disability Insurance
There are two major kinds of disability insurance, the long term and the short term. The short term disability pays out the portion of the employee’s salary or a portion of it for the initial 9 to 52 weeks of the illness or the disability. The short term insurance generally starts after the elimination period or the waiting period of 14 days. There may or may not be a waiting period depending on the given circumstances. The probable acceptance or the Bergson of the waiting is specified in the given documents relating disability insurance. For example, this kind of disability insurance for physicians, if and when they are affected with some kind of virus can come in very handy during this time.
Long term disability insurance starts when and where the short term insurance ends. The long term disability insurance provides the employee about 50% to 60% of the basic salary of the employee. The long term disability insurance pays the basic salary to the employee as long as the time period which is already mentioned in the documents. The partial wage or the party of the salary is paid to the employee according to the year mentioned in the documents signed before. For example, if nurse disability insurance is signed for a contract till he or she turns 70, the company will keep paying him or her till that age.
Some of the private companies offer both the short term disability insurance and the long term disability insurance. However, when the companies do not offer the disability insurance, the employee’s need to buy the insurance for themselves from various insurance companies,these disability insurances are based on the terms and condition which the employee and the insurance company decide. The terms and conditions are written on a document and then agreed and signed by the concerned parties. They too pay a part of the salary to the employee till the time mentioned in the document. This is for terminally ill or totally disabled patients.