Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 25, 2019

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The ability to compare disability insurance options before buying can save consumers stress and money. The Social Security Administration states that 3 out of 10 workers will become disabled for at least one year before they turn 65 years old. Disability insurance protects workers from the loss of income should they become disabled.

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There are different types of disability insurance policies, and this article will compare disability insurance for a better understanding of the subject.

Federal Disability vs. Personal Disability Insurance

There is a difference between federal disability insurance and personal disability insurance. We recognize the federal version as social security benefits. Social security disability benefits are available to anyone who has worked at least five years and made a contribution to taxes. This is a socially taxed benefit that all working Americans pay into.

SSI and SSDI are both government sponsored forms of disability insurance. SSI or Supplemental Security Income is associated with Social Security Disability Income or SSDI as it is sometimes called. This income supplement is based on need. The Social Security Administration encourages applicants of SSDI to also apply for SSI. If the applicant is not determined to be totally disabled, they may still be eligible for SSI.

If you become disabled and are unable to perform the duties of the position where you have worked, you could be eligible for Social Security benefits. Personal disability insurance is purchased from the private sector. People who purchase this type of disability insurance have it to ensure substantial supplemental income should their usual primary source is no longer accessible because of an injury, illness, or accident.

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What You Might See in a Disability Insurance Policy

Personal disability policies have standard and optional inclusions. Most optional inclusions are considered to be riders. They may also add a few dollars to your premiums. Exclusions are provisions that the insurance will not honor. Some of the provision inclusions are as follows:

  • Elimination period
  • Benefits period
  • Residual disability
  • Presumptive
  • Recurrent

The elimination period is the time between the original time of the disability and the time when the applicant is eligible for benefits. Once the benefits begin, so does the benefits period. Residual disability is broken down into two categories:

  • Loss of income
  • Loss of time and duties

Either must be as a result of the disability. Presumptive disability is a standard clause in some policies that pays the policyholder in the case of a sudden loss of one of the major senses or both limbs. Recurrent disability allows the policyholder to avoid having to reapply in the case where another condition flares as a result of a preexisting condition.

Among the exclusions are limitations on alcohol and prescription drug abuse, and conditions that are the result of an act of war. The riders are optional and they encompass:

  • COLA – Cost of Living Adjustment
  • FIO – Future Income Option
  • AIR – Automatic Increase Rider
  • Group Replacement Rider
  • Social Insurance Substitute Rider

Riders are meant to customize a policy with extra protection. Cost of living increases are standard as part of Social Security benefits. They are also protection for changes in your circumstances or income.

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May I work and still receive disability insurance?

Many people who receive benefits work. The two most popular ways to receive disability insurance is:

  • Own occupation
  • Income replacement

A third choice is gainful occupation which could be described as any means of gainful employment. This option does not recognize the previous profession as the only means of gainful employment the disabled policyholder is able to obtain.

While a disabled person may not be able to perform their previous duties they can often perform other work. The own occupation option recognizes the responsibilities held at the time the condition caused the policyholder to become disabled.

Income replacement also considers the previous line of work the policyholder engaged in before the disability, but if you work while your claim is active, or go back to work, your amount may be offset.

How much disability may I receive?

The disability amount is based on the income or investment in your policy. Most people receive somewhere between 65% and 75%. They could also receive these benefits for a couple of years, until death or somewhere in between. A financial advisor or disability calculator can help to determine how much is needed to invest to receive what is expected.

Social security benefits are based on what was invested over the years or the guaranteed minimum. Social security performs reevaluations in certain intervals depending on the injury or illness. Most personal policies have automatic renewals and can not be cancelled as long as the premiums remain current.

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How do I apply for social security and private disability insurance?

Social security benefits are available to anyone who applies in person or online. The applicant has to fill out several forms that are submitted for a review that could take up to five months. If the Social Security Administration denies your claim, you have the right to a reevaluation and hearing if there is a second denial.

Personal disability insurance is a choice that requires the purchase of a policy. Many people sit down with an agent to determine how much they need over the course of their working years. This type of insurance could even help during the Social Security application process. While many SSDI claims are denied during the first phase, personal disability insurance serves as the primary income source.

Shopping for disability insurance will depend on your personal situation. While anyone who has been employed for more than five years is eligible for federal social security, it might behoove a savvy business person to purchase personal disability insurance coverage. If you are not eligible for federal social security it would be a smart move to purchase some. This is especially if you are self employed and have a family.

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