Disability insurance is a type of coverage for people whom suffer from physical or mental impairment.
Generally speaking you´ll need disability insurance if because of a sickness or injury you are unable to work on your own or any occupation of which you are suited by training, education or experience. An individual or group of individuals can get disability insurance for themselves against it, often times as part of a life insurance package or sometimes separately.
Insurance companies often have slightly different definitions of what determines permanent disability, however typical definitions would include:
Loss of two of: eyes, arms, or legs.
Absence from work for six months due to an accident or illness, without expectation of returning to work.
Disability insurance differs from income protection insurance in that the insured person must be permanently disabled for the insurer to pay out, rather than just absent from work for an extended period of time.
Individual disability insurance is truly a basic concept. It is an insurance product designed to replace anywhere from 45-60% of your gross income on a tax-free basis should a sickness or illness prevent you from earning an income in your occupation.
Every disability insurance policy from every insurance company is very different; this is not a product to simply shop for the most competitive rate. To buy the cheapest disability insurance policy on the market is to throw money away. The odds of getting paid a monthly benefit under a cheap contract may be significantly lower than receiving benefits from a quality contract.