Disability insurance protects the income of an individual in the event of an illness or an accident. The difference in the plans lies in the length of the coverage period.
There are three types of disability plans: short, intermediate, and long term.
A short term plan generally provides coverage from the first day to 90 or 180 day and at times one year.
An intermediate plan generally has an elimination period (period of time disabled before benefits begin) of 30 to 90 days before the benefit begins.
A long term plan can begin on the first day or have an elimination period (depending on the program). The premium is generally reflected in the policy with regards to a benefit period.
Age, occupation, wages, and health are contributing factors when applying for private disability insurance.
Group disability insurance is based on a group of people. The benefits and premium may reflect the group.
Oftentimes, a person will have a short and a long term plan. The short term plan compensates for the elimination period if the long term plan doesn't begin on day one. This is common with group polices.
Disability plans are also available to replace income that would normally be directed into a retirement plan.
Self employed individuals may consider overhead protection plans. This is a disability plan structured to support business overhead in the event of a disability.