As its name suggests, disability insurance is a type of insurance product that provides income in the event that a policyholder is prevented from working and earning an income due to a disability.
In the United States, individuals can obtain disability insurance from the government through the Social Security System. They can also purchase disability insurance from private insurers.
How Disability Insurance Works
Oftentimes, insurance products will protect against a specific loss, such as when a property and casualty insurance plan reimburses the policyholder for the value of stolen property. However, in the case of disability insurance, this compensation relates to the lost income caused by a disability.
For example, if a worker earned $50,000 per year prior to becoming disabled, and if their disability prevents them from continuing to work, their disability insurance would compensate them for a portion of their lost income provided that they qualify. In this sense, disability insurance essentially covers the opportunity cost of the now-disabled worker.
Who is eligible for Disability Insurance Benefits?
To be eligible for disability benefits, you must:
- Be unable to work because you have a medical condition that is expected to last at least one year or result in death.
- Not have a partial or short-term disability.
- Meet SSA’s definition of a disability.
- Be younger than your full retirement age.
If you qualify for disability benefits, certain members of your family may be eligible to receive benefits based on your work record.
To find out if you may be eligible for Social Security’s benefit programs, check out SSA’s Benefit Eligibility Screening Tool.
How do I apply for Social Security Disability Insurance Benefits?
Once you know which benefits you may be eligible for, visit Apply For Social Security Benefits to apply online.