(ThyBlackMan.com) Disability insurance replaces a portion of employee’s income when they cannot work because of an illness or disability. Disability insurance provides wage replacement benefits that cover, on average, up to 60% to 66% of employee earnings. To cover the remaining of your income you can consider buying a private/individual insurance disability income policy to supplement your Company group plan or provide coverage if a group plan is not offered. When employers offer disability insurance, they typically pay the full cost of coverage for most workers.
In 2018, 42 percent of private industry workers had access to short-term disability insurance plans and 34 percent to long-term plans. Twenty-six percent of state and local government workers had access to short-term coverage and 38 percent to long-term benefits.
DISABILITY TERMS DEFINED
There are many definitions of disability utilized by the disability insurance industry. Some major polices include:
* OWN OCCUPATION INSURANCE POLICY: Covers individuals who become disabled and are unable to perform the majority of the occupational duties that they have been trained to perform. This type of insurance policy is contingent on the individual being employed at the time the disability occurs. You will be considered disabled if you are unable to perform each and every responsibility of your current position. 
* OWN OCCUPATION NON CANCELLABLE: This policy basically guarantees that once issued, as long as you pay your premiums, which cannot be increased, your policy will remain in effect.
* MODIFIED OWN OCCUPATION: means you are unable to perform the specific occupation you were engaged in at the time you became disabled, and not working in another occupation. Just as with traditional “own occupation” definitions, most policies provided with “modified own occupation” to medical and dental professionals and lawyers define “own occupation” as the specific specialty you practice within your field. Sometimes “specialty letters” specifically providing this explanation were provided with your policy when it was issued.
* Any-occupation: policies define disability more narrowly, as the inability to work in any gainful occupation for which you are reasonably suited, considering your education, training, and experience. In other words, if you can work in any gainful occupation, you will be denied benefits. This is typically the group policy employers purchase, to save cost
* PARTIAL BENEFIT POLICY: A “partial” benefit will pay you if you cannot work and suffer a loss of income as a result of being unable to perform at prior capacity because of injury or illness. Partial disability is defined as any type of disability in which the workers is unable to perform at full physical capacity
HOMEWORK – I RECOMMEND YOU RESERACH BELOW:
1. Does your company/employer have a Group Short and Long Term Disability Policy?
2. If yes, ask for a copy of that policy and determine what type of coverage you actually have. The percentage of your wages you are covered? What definition for disability is covered? See above definitions. File the policy somewhere you or your family can find it. This is the same advice for all your insurance policies {Home, Life, Auto, Disability, Long Term Care (a future topic) and Umbrella Policies}
3. Given your current and future expected expenses, is this policy (the benefit amount) adequate?
NEXT WEEK CONTINUATION
Next week I will discuss how much disability insurance is typically recommend and other nuisances. As well as precautions needed if you should lose your job, that provided the Group Disability Insurance.
CONCLUSION
You have to medically qualify for disability income insurance. The younger you are, the better the chances of purchasing a policy. While I purchased my first life insurance policy when I was in college, (I did not need it but fell for Greg’s sales pitch.) it was years later I became educated on the value of disability insurance. In later years, managing workers compensation for several multi national companies I begin to recognize a major need, but often not purchased, is disability insurance. The goal of Wealth Building Powers blogs, is to educate my readers on the accumulation and PROTECTION of wealth – your net-worth. Short and Long Term Disability insurance policies are a NEED to protect you and your family.
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DISCLAIMER
I am a proud nerd (my beautiful wife and daughter told me so) investment and finance blogger, with University Rutgers, MBA and Harvard University, Advanced Management.
I am a successful investor in equities and real estate and happy to share my personal finance and investment lessons learned with you. I am NOT however, a licensed financial advisor. Please do not construe my suggestions on this blog, as recommendations for your personal situation. For individual finance advice please seek your own licensed CPA or financial advisors.
Staff Writer; Styron Powers
One may visit this brother over at; Powers Investments Management and also connect via LinkedIn; S. Powers.
