Life insurance is often thought of as a way to protect your loved ones in the event of your death, but it can also provide financial protection in the event of a disability. Disability income insurance is a type of life insurance policy that provides a source of income if you become disabled and are unable to work. Here’s how it works:
- You purchase a policy: Disability income insurance is available as a standalone policy or as a rider on a life insurance policy. You’ll need to decide how much coverage you need and for how long you want the coverage to last.
- You become disabled: If you become disabled and are unable to work due to a covered injury or illness, you can file a claim with your insurance company.
- You receive income: If your claim is approved, you’ll receive a monthly payment (also called an “indemnity”) to help cover your living expenses while you are unable to work. The amount of the payment is typically a percentage of your pre-disability income, and it will be paid until you are able to return to work or until the policy ends, whichever comes first.
- You return to work: If you are able to return to work, your payments will stop. However, if you are unable to return to work and your policy has not yet expired, you may be able to continue receiving payments.
Disability income insurance can be an important financial safety net in the event of a disability. It can help to cover your living expenses and provide financial security for you and your loved ones while you are unable to work. If you are concerned about the financial impact of a disability, it may be worth considering purchasing a disability income insurance policy.
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