Disability Income Insurance
Health insurance that provides income payments to the insured wage earner when income is interrupted or terminated because of illness, sickness, or accident. Definitions under this insurance include:
- Disability: Physiological or Psychological condition that prevents an insured from performing normal job functions.
- Total Disability: Monthly income payment from a disability income insurance policy made to the insured wage earner when income has been interrupted or terminated because of illness, sickness, or accident provided the following stipulations by the wage earner have been met: (1) total disability for the duration that the policy is in force and beyond the elimination period; and (2) while remaining totally disabled, income payment made at the end of each month until the limits on the maximum amount of benefit are reached, at which time payment will cease.
- Partial Disability: An amount usually expressed as a percentage of the monthly indemnity for the total disability benefit provided by the disability income insurance policy. This amount becomes payable when the insured wage earner's income has been interrupted or terminated because of illness, sickness or accident. Payments continue up to the time and amount limitations as stipulated in the policy. This type of benefit has been replaced, in large part by the residual disability income insurance policy. Partial disability or partially disabled means that as a result of an injury or sickness: A) You are not totally disabled; and B) You are under the regular care of a physician and are following the recommended appropriate treatment; and C) you satisfy either condition (i) or (ii) as follows: (i) You are engaged in your regular occupation, but are unable to perform one or more of the important duties, or are unable to work for more than half of the time usually spent at that occupation prior to the start of the injury or sickness; or (ii) you are engaged in another gainful occupation, but are unable to work for more than 20 hours per week.
- Residual Disability: The inability to perform one or more important daily business duties, or inability to perform the usual daily business duties or the time period usually required for the performance of such duties.
- Amount of Benefits: Many policies stipulate that all sources of disability income cannot exceed 50% to 80% of the insured's earnings prior to the disability, subject to a maximum absolute dollar amount.
- Duration of Benefits: Length of time benefits will be paid. Some policies will pay benefits for one or two years whereupon the insured must agree to be retrained for another type of work. Other policies pay benefits as long as the insured is unable to do the job for which he or she is suited by training, education, and experience (often up to age 65, when retirement programs take over). Some policies pay lifetime benefits.
- Elimination Period (Waiting Period): Period beginning with the first day of disability, during which no payments are made to the insured. The longer this period, the lower the premiums.
- Physician's Care: The insured must be regularly attended by a legally qualified physician because it is necessary to assess changes in severity of disability.
- Pre-existing Condition: If an insured has a pre-existing injury, sickness, or illness, most policies will not pay income benefits either for the duration of the policy or until a period of time (usually from six months to one year) has elapsed.
- Recurrent Disability: Most policies will not pay income benefits to an insured who is experiencing a recurrent disability unless the recurrent disability is deemed a new disability. Some more progressive policies define a recurrent disability as a new disability if there has been a break of at least six months between the first disability and the current disability, and the insured has returned to work during that break.
- Residual Disability: Means that as a result of injury or sickness:
A) Your not totally disabled; and
B) You are engaged in your regular occupation or another occupation; and
C) Your loss of earned income is at least 20% of your prior earned income; and
D) You are under the regular care of a physician, and are following the recommended appropriate treatment.
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