Types of Disability Insurance

• Disability insurance can be bought to cover temporary periods of time or pay benefits to permanently disabled insureds for the rest of their lives. Short-term disability (STD) policies pay insurance benefits to insureds for short periods such as a couple of months. Long-term disability (LTD) plans cover lengthier periods of time such as several years and up to providing permanent benefit payments.
  
  

What Does it Cover

• Disability insurance policies cover many different medical conditions ranging from injuries such as broken bones to illnesses such as the flu and pneumonia. Some of the most common health problems that lead to disability insurance claims are back injuries, maternity leave and cancer treatments according to Unum. In 2008, Musculoskeletal/Connective Tissue Disorders (22.8 percent) was the leading cause of LTD claims the Council of Disability Awareness reports.
  
  

Considerations

• Several factors are taken into consideration by insurers before making policy decisions and setting premium amounts. One of the most important factors is the applicant's work industry. If claims are filed by workers in an industry that exceeds the insurers' normal rates, applicants will pay higher premiums even though the history of injuries is typically minor. This scenario can cause clerical workers to pay more in premiums than those working in physically demanding industries such as construction or manufacturing.
  
  

Chances of Becoming Disabled

• Workers face the possibility of becoming disabled every day. In fact, the Social Security Administration reports that 30 percent of workers 20 years of age or older will become disabled at some point before retirement age. Some disabilities may have insureds out of work for significant periods of time as well. According to Insurance.com, 50 percent of individuals who have a disability that lasts more than six months end up being out of work for five years or more.
  
  

How Much Does Disability Insurance Pay

• Although disability insurance policies prevent total income losses for insureds, benefits payments do not cover 100 percent of their earnings. Benefits amounts vary but most insurers typically cover 50 to 60 percent according to McClaren and Associates with some paying as high as 70 percent such as MetLife. By only covering partial amounts of the insureds wages, insurers want to provide an incentive for them to return to work as quickly as they can.