Disability insurance 101- What You Absolutely Need to Know

Disability insurance is the mutual agreement between the policy provider and the beneficiary in which the provider agrees to pay a certain amount of money to the beneficiary on certain unexpected event leading to a disability, which incapacitates the person in doing his duties of the occupation and / or of any other job.

Disability insurance is of three broad types depending on the clause put forward by the insurance provider:
a) Own occupation disability insurance
b) Income replacement insurance
c) Gainful occupation coverage

1) Own occupation disability insurance refers to the insurance money claimed by the beneficiary on his/her inability to perform the regular duties of the regular occupation although the person may or may not able to do another job.

2) Income replacement insurance means that the policy provider is supposed to pay the agreed amount in case because of some mishap you are not able to do your duties both in your occupation and any other job.

3) Gainful occupation coverage denotes that the beneficiary will get the payment if he / she is neither able to perform the duties of the occupation nor any other work which the person is capable of doing because of his/ her education or knowledge.

There are certain other legal terms attached to this type of insurance. Elimination period is the time period from the time of the disability to the maximum time you are eligible to earn benefits. A short elimination period will be charged higher than the longer elimination period.

The period of time the beneficiary is eligible to earn benefit is called the benefit period.

Now the most important thing is certain points which are excluded from the usual policies for e.g. if the claimant has suffered the disability in times of war or even while in alcohol or drugs or having the damage while involved in crime most of the policies either refrain from providing benefits or will provide only limited benefits. These points are to be looked for before signing onto the policies for these are usually written in fine print.

By Rita roy