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Disability Insurance Basics
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Definition of Disability Insurance
A type of insurance that provides income in the event that a worker is unable to perform their work and earn money due to a disability.
Own-Occupation Disability Insurance
A policy that pays benefits if you are unable to perform the duties of your specific occupation, regardless of whether you can work in a different job.
Any-Occupation Disability Insurance
A policy that only pays benefits if you are unable to work in any job suitable to your education and experience.
Waiting (Elimination) Period
The time period between the onset of a disability and when you start receiving benefits. It's effectively a deductible period of time.
Benefit Period
The length of time during which a disability insurance policy will pay benefits after the waiting period has ended.
Short-Term Disability (STD) Insurance
A type of disability insurance that covers a portion of the insured's salary for a short period, usually 3 to 6 months.
Long-Term Disability (LTD) Insurance
Insurance that pays a percentage of your salary after you have been disabled for a certain period, typically covering longer periods such as 5 years, up to retirement age.
Residual Benefit
A feature in disability insurance policies that provides benefits to individuals who can still work but have reduced earnings due to their disability.
Cost of Living Adjustment (COLA)
A feature of some disability insurance policies that increases benefits over time based on inflation or another measure to help the benefits keep pace with the cost of living.
Rider
An optional provision that can be added to a standard insurance policy to provide additional benefits or coverage.
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