What it is:
Disability insurance is a type of insurance that exists to protect the income of workers who are injured in a way that prevents them from doing their job. It is common for employers to offer it to their employees as a workplace benefit, especially in professions that are particularly dangerous.
Who it is for:
Most workers can benefit from this type of insurance. Approximately one-quarter of the American workforce suffers from an injury that is bad enough to cause a disability over the course of their career, and many others suffer from minor injuries that can take them out of the workforce for shorter periods of time. An insurance policy can prevent those injuries from causing significant financial hardship.
How it works:
These insurance policies take effect when the policy holder is injured and removed from the workforce. Depending on the type of policy, the injured person will receive either a single, large payment or a series of smaller payments for as long as the injury persists. In some cases, both payments occur. Regardless of the policy’s details, the payments allow the injured worker to avoid financial hardship during the recovery process.
People who want to purchase a policy can choose from a few different options. The size of the policy is highly variable, so people with different financial needs can choose the policy that meets those needs. Purchasers can also choose the nature of the payment that they will receive if injured, and people who want to reduce their premiums can restrict the type of injury that will receive compensation.
Disability insurance provides protection against the financial impact of an injury. Many disabilities can prevent a person from working for very long periods of time, and few people have saved enough money to retain their financial security for the entire time that they will need to recover from an injury. The chance of a worker suffering from a disability at some point during their career is very high, so the value of an insurance policy that can help those people avoid going bankrupt is also very high.