📄️ 10.0 Disability Income
Learning Objectives
📄️ 10.1 Disability Income Insurance
Disability income insurance is often referred to as a “forgotten need,” as many individuals underestimate the importance of protecting their income against the risk of disability. Workers may assume they are adequately covered by Workers' Compensation, without recognizing that it only applies to work-related injuries or illnesses and does not cover disabilities occurring outside of employment. Although Social Security Disability Income (SSDI) provides benefits, eligibility requirements are strict, making qualification difficult for many individuals.
📄️ 10.2 Qualifying for Disability Benefits
Disability policies may be issued as individual policies or included within a group plan. These policies are generally classified according to the situations in which a covered disability may occur.
📄️ 10.3 Unique Aspects of Individual Disability Underwriting
The insured's occupation serves as the primary rating factor in underwriting disability income insurance, as American workers are statistically more likely to experience a disability than death before age 65.​
📄️ 10.4 Group Disability Income
Underwriting Group Disability Plans
📄️ 10.5 Disability Income Special Uses
Business Overhead Expense: Designed to reimburse a business for its ongoing operating expenses if the owner becomes disabled. Covered expenses typically include items such as office rent, utilities, and employee wages. However, this type of policy does not provide income replacement for the owner; it is strictly intended to keep the business operational during the period of disability.
📄️ 10.6 Disability Income Policy Riders
Optional Benefits
📄️ 10.7 State Workers' Compensation Benefits
Workers' Compensation coverage applies to bodily injuries and occupational diseases that arise out of and in the course of employment. To understand how this system supports employees, it is important to recognize that most state laws provide four primary (“statutory”) categories of benefits:
📄️ 10.8 Social Security
Social Security Disability Insurance
📄️ 10.9 Coordination of Benefits
When an individual receives disability income benefits, both Workers’ Compensation and Social Security Disability Insurance (SSDI) may impact other benefits for which the individual is eligible. Workers’ Compensation benefits, which are mandated by state or federal law, are considered primary and are paid before any other insurance benefits.
📄️ Recap of Chapter Ten
1. Disability income insurance addresses the potential loss of earnings resulting from illness or injury. It is designed to provide financial protection by replacing a portion of the insured's income. (10.1)