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Types of Disability Coverage in Life and Health Insurance

Definition of disability
The definition of “disability” is subjective because some people can work without complaint with a condition that would disable and incapacitate others. A typical life and health insurance policy may define disability insurance as including insurance related to injury, disablement, or death resulting to the insured from accidents or sickness.

Forms of coverage
The two principal forms of disability coverage in life and health insurance are disability income insurance and waiver of life insurance premium payment during disability.

Disability income insurance
Disability income insurance pays certain monetary benefits to the insured during his disability as defined in the policy. These benefits are common in group insurance.

Waiver of life insurance premium
Waiver of premium payment during disability is a benefit whereby the insured need not pay the premium on a life insurance policy during his disability. Although the premium is considered “waived,” in effect, the insured pays a premium that provides a cash credit toward the premium on the policy in case he becomes disabled.

Copyright 2011 LexisNexis, a division of Reed Elsevier Inc.