Health Insurance Type(s) – Disability Income Insurance

Types of Individual Disability Income Insurance

Health Insurance Type: Accident-Only Plans

When looking for disability income insurance, several options are available on the individual side. First, there’s accident-only coverage, meaning this health insurance type will pay for disabilities caused by accidents. It will not, however, cover disabilities caused by illnesses because it is accident-only. Generally, an accident-only plan is inexpensive and can easily pair with an accident-only life policy. 

Health Insurance Type: Simplified-Issue Plans

There’s also simplified-issue disability insurance, similar to a group plan. For instance, the premiums for a simplified issue and group plan are roughly the same. To qualify for a simplified issue, this health insurance type will make the insurer ask a few knock-out questions. As long as the individual answers ‘no’ to the questions, they get the coverage. However, the coverage period usually ends after two years. In addition, simplified-issue plans have a cap on the amount of income they will replace. In other words, it won’t fully replace someone’s gross or net income. Typically, the plan will cover about 60-70% of a person’s taxable income.

Short-Term and Long-Term Plans

There’s also short-term disability insurance. This health insurance type is available in two forms: accident-only coverage or full health and accident coverage. In addition to short-term, there’s long-term disability insurance. If you have a group plan that covers disability income, then you cannot purchase a short-term or long-term plan on the individual market to supplement your group coverage. Like the simplified-issue plan, these plans cover only 60-70% of someone’s income, not the same amount or even more of what they earned before the disability. Therefore, a person can not have their own plan in addition to a group plan. The plan is simply there to ensure someone doesn’t lose everything.

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This article was revised on 5/9/24.

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