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Disability Income Insurance

Disability income insurance is a type of coverage that replaces a portion of your income if you become unable to work due to illness or injury. It provides ongoing monthly payments designed to help you meet financial obligations such as rent, mortgage, utilities, or living expenses while you recover or adjust to a long-term disability.

This type of insurance can be short-term, covering temporary disabilities for a few weeks or months, or long-term, continuing until you recover, reach a certain age, or the benefit period ends. The benefit amount is typically a percentage of your pre-disability earnings, often between 60 and 85 percent. Policies may also include features such as a waiting period (called the elimination period), cost-of-living adjustments, and partial disability benefits for those able to return to work part-time.

Disability income insurance provides financial stability during health-related work interruptions and is an essential complement to life and critical illness insurance.

Example:

If your monthly income is $5,000 and your disability insurance covers 70 percent of earnings, you would receive $3,500 per month after the elimination period if you are unable to work due to a covered disability.

What to Watch For:

Understand how your policy defines “disability.” Some plans pay if you cannot perform your regular occupation, while others pay only if you cannot work in any occupation for which you are reasonably qualified. Review elimination period options carefully to balance premium cost and financial readiness. Confirm whether your benefits are taxable, as this depends on who pays the premiums.

Related Terms

Dental Insurance

Dental insurance is a type of health coverage that helps pay for the cost of preventive, basic, and major dental services. It is designed to make oral care more affordable and to encourage regular checkups that prevent costly procedures later on. Dental insurance is offered through group employee benefits, individual plans, or conversion plans for people leaving workplace coverage.

Critical Illness Insurance

Critical illness insurance is a type of financial protection that pays a one-time, tax-free lump sum if you are diagnosed with a covered serious illness such as cancer, heart attack, or stroke. Unlike disability insurance, which replaces a portion of your income over time, critical illness insurance gives you a single payout that you can use however you choose - for medical expenses, household bills, recovery time, travel, or lifestyle adjustments.

Long-term Disability insurance

Long-term disability (LTD) insurance provides income replacement if you are unable to work for an extended period due to illness or injury. It ensures financial stability by paying a percentage of your regular income, typically between 60 and 85 percent, after you have been disabled for a specific waiting period known as the elimination period. LTD benefits continue until you recover, reach a set benefit end date, or reach retirement age, depending on the terms of the policy.

Dependent

A dependent is a person, usually a family member, who qualifies for coverage under someone else’s insurance plan. Dependents are typically the spouse or children of the primary insured person, also known as the plan member or policyholder. Some plans may also cover other individuals who rely on the plan member for financial support, such as a common-law partner or a child with a permanent disability.

Dentist

A dentist is a licensed healthcare professional who diagnoses, treats, and helps prevent conditions affecting the teeth, gums, and mouth. Dentists play a key role in maintaining oral health through preventive care, restorative treatments, and patient education. Common services include cleanings, fillings, crowns, root canals, extractions, and oral examinations.

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