What is disability income insurance?
Disability income insurance pays for some of the wages you lose if you cannot work because of an illness or injury. Disability income insurance does not pay benefits every time you miss work, though. Instead, all of the conditions in your disability income insurance policy must be met. Most policies require you to miss a minimum number of days before benefits kick in. For example: Your policy might say that no benefits will be paid until you miss 30 consecutive days of work. All policies exclude some disabilities, as well. If you cannot work because of an illness or injury, check your policy to see whether your disability is covered. If you need help understanding your policy, call our consumer hotline at 888-877-4894 (toll-free).
Disability income insurance does not pay all of your wages while you are disabled. Instead, it pays only a percentage. Generally, benefit levels are between 60 percent and 85 percent of your typical monthly income.
Key facts about disability income insurance:
- Sometimes disability income policies require you to apply for other benefits that are available to you before the disability income benefits kick in. If, for example, you have sick leave available, your disability income insurance policy might require you to use all of your sick leave before you get any disability income benefits. The same can be true for unemployment compensation, bonuses, or state paid leave policies, such as Paid Leave Oregon. Simply put: Your disability income insurance is often last in line to replace your wages if you are disabled and cannot work. If this is the case for you, it will be said so in your policy.
- If you have other benefits available to you, your disability income insurance might pay you less considering the fact you are receiving assistance from some other source. You can buy disability income insurance from an insurance agent or online. Coverage also can be provided through a group, such as your employer, union, or trade association.
- Group disability income benefits vary by group, and are designed by the employer or negotiated by a union or other group.
Yes, your disability insurer may require you to apply for other benefits before your disability income insurance kicks in. Although, you have to apply for other benefits only if your disability insurance policy says you have to. Be sure to check your policy. If you need help understanding your policy, call our consumer hotline at 888-877-4894 (toll-free).
Yes,
your disability insurer can deny coverage if your disability income insurance
policy excludes mental health or substance abuse-related absences. Be sure to
check your policy. If you need help understanding your policy, call our consumer
hotline at 888-877-4894 (toll-free).
Yes,
that is possible. If you receive other benefits, such as Paid Leave Oregon or
sick leave, and the amount you receive from those other benefits replaces all
of your income, then your disability income policy might not pay you any
benefits. This is not the case if your policy includes a minimum payment or a
guaranteed weekly amount, which must be paid regardless of what you receive in
other benefits.
When an insurance company decides how much you pay for your disability income insurance policy, it looks at the odds that it will never pay any benefits under your policy.
Your insurance might never pay for several reasons. You might never become disabled. If you do become disabled, it might not be for a reason that qualifies you for disability benefits. Also, you could become disabled, but some other entity – such as Paid Leave Oregon – might be responsible for paying
all or some of your lost wages. There is a chance that any of these things could happen.
Those chances are built into the cost of your premium. If your disability income insurance was
first in line to pay for your disability – instead of
last – then your premium would be more expensive.
Paid Leave Oregon is a new program, which means it will take some time for your premium to adjust to this new benefit, if it does adjust. We encourage you to look at other insurers if you think your premiums are too expensive, or to reassess whether you need disability income insurance now that Paid Leave Oregon is available for Oregon workers.
Contact your life insurance company if you have a disability income insurance rider on a life insurance or annuity policy for more information about how Paid Leave Oregon may affect your insurance coverage.
Best practices for disability income insurance
- Re-read your disability income insurance policy to learn how the insurer calculates your weekly or monthly income benefit, and to be aware of any exclusions, including any exclusion for pre-existing conditions.
- Call your insurance company or agent, or visit their website, to see what consumer-focused information they provide about calculating the benefit amount.
- Talk with a financial adviser to determine how commission and bonuses may offset your disability income benefit.
- If you receive letters from your disability income insurer or employer about your disability income insurance, be sure to read the correspondence. Your disability income insurer may require you to submit proof that you have applied for Paid Leave Oregon or other insurance benefits, and impose a limited response time.
For more information about this or any other insurance topic, call our consumer hotline at
888-877-4894 (toll-free).