Frequently Asked Questions
Do I get disability insurance through work?
Although there is no law requiring it, many workers can get disability insurance through their jobs, often funded by their employers. But sometimes, employer-provided disability insurance plans may be insufficient to meet workers' income needs in the event they become disabled. In those cases, workers may consider purchasing private policies to supplement their coverage.
Also, employer-provided disability insurance is generally not portable. That means, when you leave that job, you will likely lose that coverage. Privately purchased plans are portable and as long as you continue to pay premiums when due, stay with you no matter where you work.
In addition, if disability insurance isn't provided through your job or if you are self-employed, then you may want to purchase a disability income insurance policy.
Are disability insurance benefits taxable income?
Whether disability insurance benefits are subject to taxes depends on how the policy was funded. Any income you receive through an employer-provided disability income policy will be taxed. In some instances, your employer may pay the taxes. If you pay the premiums for disability insurance, then the benefits are typically not taxed.
What's the difference between a noncancelable policy and a guaranteed renewable policy?
Noncancelable policies must be renewed by the insurance company unless the policyholder fails to pay premiums. Insurance companies also are not allowed to increase the cost of the premiums or reduce the amount of benefits on these policies if the insured continues to pay premiums.
Guaranteed renewable policies mean the insured can renew the policy with no change in benefits but may face increased premiums. However, if premiums are raised, they must be increased over entire classes of policyholders and not just on individual policies.
What's the difference between critical illness and disability income insurance?
Critical illness insurance and disability income insurance can both help to provide money when you're dealing with health issues. Whether you stop working temporarily or face high out-of-pocket expenses, these policies might play an important role — but they work differently. Critical illness insurance covers a specific, predefined set of medical conditions. Disability income insurance provides benefits to insureds who are disabled as a result of injury or illness and cannot perform normal work duties.
