Disability insurance protects individuals and families by providing some income while a breadwinner is not able to work. The U.S. Social Security Administration oversees two programs for the disabled, while private insurers offer various types of disability insurance policies that can vary widely in both scope and benefits.
There are several disability insurance options available. Private long-term and short-term disability plans pay a percentage of a disabled worker's salary for a specified period of time. In addition, the Social Security Administration helps those who have worked long enough to receive Social Security benefits, as well as their spouses and their children. Another Social Security program aids low-income disabled people.
Social Security Disability Insurance
Social Security Disability Insurance (commonly known as SSDI) pays cash benefits to those who are disabled (and are expected to be so for a year or more) and as a result cannot meet specific income guidelines set by the Social Security Administration. Depending on your circumstances, your children or spouse may also be able to claim disability benefits based on the length of your work record.
Supplemental Security Income
Supplemental Security Income (commonly known as SSI) provides cash assistance to very low-income elderly and disabled people. While it is administered by the Social Security Administration, its funds do not come from Social Security taxes. Funding for SSI comes from general tax revenue.
Long Term Disability Insurance
Long-term disability insurance is private insurance that can be purchased as a group policy (through one's employer) or as an individual policy. Long-term disability insurance will pay you a percentage (usually between 50 percent and 66 percetn) of your salary while you are unable to work. Depending on the policy, these payments payments may continue over a period of a few years, or until you reach age 65.
Long-Term Disability and Partial Disability
Some long-term disability policies will make payments if, as a result of your disability, you can no longer work at your previous job, but are able to work at a job in which you make less money. If your policy does cover partial disability, you will typically receive a percentage of the difference between your current and previous salaries.