The Basics of Disability Insurance

Disability insurance provides income protection to the insured in the case they cannot work due to an accident or illness that happens off the job (workers comp covers on the job accidents). The insured must meet the definition of “total disability” or “partial disability” as it is stated in the policy in order to receive benefits. These definitions according to Florida Dept. of Financial Services are:

Total disability: The insured must be unable to work at their own occupation. However, at the end of a specified period after the disability begins, but not less than 12 months, a disability income Policy can include wording that indicates an insured is considered totally disabled only if the disability prevents the insured from working at any occupation for which he/she is reasonably fitted by education, training, or experience. (1)

Partial disability provision in some disability income policies allows the insured to collect some benefits under the contract if they are unable to perform one or more important functions of their regular occupation. This benefit pays the disabled insured an amount based on the percentage of income that the insured lost because they are unable to perform some of the duties of his or her former job.(2)

Any Occupation: In a disability income policy, ‘any occupation’, usually means an insured will be considered disabled only if they are unable to perform the duties of any occupation for which they are qualified by education, training or experience. This is closely related to the definition that the Social Security Administration uses to determine disability.(3)

Own Occupation: In a disability income policy, ‘own occupation’, usually means the insured is considered totally disabled if they cannot perform the duties of their own occupation. Under this definition, benefits can often be paid to an insured person even if they subsequently (after filing a claim ) become employed in another occupation. (3)

There are 2 methods insurers use to determine the amount of benefits. One is a percentage of gross monthly income. To avoid the chance of malingering insurers generally will not pay benefits that amount to more than 70% of an insured gross monthly income. The second, which is more common in individual plans, is the flat amount method which is paid regardless of other income if the insured becomes totally disabled.

Disability policies also have “Elimination Periods” which is the amount of time a person must be disabled due to accident or illness before benefits will start to pay and “Benefit Periods” which is the maximum amount of time that the insured can receive benefits. It is expressed in the policy as “accident elimination period/sickness elimination period/benefit period”. For example a policy with a 15 day accident period, 30 day sickness elimination period and a 180 day benefit period will look like 15/30/180.

The shorter your waiting periods the higher the premium payment will be. Likewise, the longer the benefit period the higher the premium.

Disability insurance also comes with exclusions that are common among other types of insurance. Some common exclusions which a policy will not pay benefits for are;

1: Accidents that result while committing a felony.
2: Intentional self inflicted injuries
3: Injuries that result from acts of war
4. Alcoholism or drug addiction.

As always you must refer to your policy documents for definitions, coverage specifics and exclusions.


1: Florida Dept of Financial Services. “Disability Income – Total Disability Defined.”
2: Florida Dept of Financial Services. “Disability Income – Partial Disability.”
3: Florida Dept of Financial Services. “Disability Income – Any Occupation vs Own Occupation.”
09/2008 .