Types of Coverage

Social Security

Social Security does not just provide for retirement income but disability income as well.

• In 2009, the average monthly payment for a disabled worker was $1064; the average monthly payment for a family of a male disabled worker, young spouse and 2 or more children was $1670. See SSI Fact Sheet
• Eligibility is based on being unable to perform any gainful employment. See SSDI Disability Planner
• You are eligible for benefits after you have been disabled for 5 months and if the disability is expected to last 12 months. See Waiting Period Question
• Social Security disability payments are subject to federal income tax if your income exceeds $25,000 individually or $32,000 jointly. See Tax Question

Workers Compensation

Most employers are required to provide this coverage. The amount and duration varies by state. Workers Compensation only pays if the disability occurs on the job, and usually lasts for only a few years and the payments are low.

Individual Policies

For individual policies, the applicant needs to qualify and go through an underwriting process, similar to the process required for life insurance. The applicant could be subject to a higher premium or even be declined based on his or her occupation, medical history, or lifestyle. Individual policies are usually purchased by high income professionals because of the cost.

Group Policies

Some states require employers to carry group disability insurance anywhere from 26 to 52 weeks.

Group Long Term Disability (LTD)

Group LTD is carried by almost half of mid-size to large employers and provides long term benefits for at least 5 years covering about 60% of salary. The premium is usually very low, does not require proof of insurability, and often is fully paid by the employer.