Disability Income Insurance

Elimination Period

Optional provision in health insurance policies which states the length of time between when sickness, accident, or disability begins and when benefits become payable. Often referred to as a "time deductible.

Own Occupation

Definition used to establish total disability. The insured must be unable to perform the work duties of his Own Occupation. Less restrictive than the Any Occupation definition of total disability.
Coverage is limited to the first two years after the disab

Any Occupation

Definition used to establish total disability. The insured must be unable to perform the work duties of any occupation for which he is qualified by education, experience, or training. More restrictive than the own occupation definition of total disability

Total Disability

Requirement for full disability income benefits, typically inability to perform work duties. Each policy defines total disability differently.

Pure Loss of Income

Or "income replacement contracts" pay the insured a portion of his earned income while disabled. Income replacement contracts do not require the insured to endure a period of total disability before benefits are paid. These policies tend to be more afford

Presumptive Disability

A condition, such as loss of sight, hearing, speech, or the use of arms or legs, which qualify as total disability, regardless of ability to work.

Loss of Earnings Disability Test

Disability income policy that specifies the own occupation definition of disability for the first few years of disability after which the any occupation disability takes over.

Accidental Means

Restrictive definition of accident in which the cause of the accident must be unintentional and unexpected. The accidental means definition can be thought of as a "cause and effect" test.

Accidental Bodily Injury

Definition of accident in which the injury is unintentional and unexpected. Policies using this definition cover all injuries except self-inflicted injuries. This more liberal definition can be thought of as a "results only" test.

Probationary Period

Occurs from the policy effective date and extends for a period of time such as 15 or 30 days. The waiting period for accidents may be different than for sickness. During the probationary period, benefits are not payable for sickness but usually are payabl

Elimination Period

A "time deductible" specifying a period of time beginning immediately upon a disability when benefits are not payable, typically ranging from 30 to 180 days or more.
The purpose of the elimination period is to prevent the insurer from paying short-term di

Benefit Period

The period of time disability income benefits will be paid to the insured after the elimination period is fulfilled.
May be one year, two years, five years, or until the insured reaches the age of 65 (retirement age).

Delayed Disability

Provision that allows a stated period of time to lapse after an accident before the onset of a disability, after which period the insured is still eligible for benefits. This stated period may be 30, 60, or 90 days.

Partial Disability

The inability to perform one or more work duties of a person's own occupation, or inability to work full-time.

Flat Amount Benefit

Under a Partial Disability, a specific amount is stated in the policy. Typically, the amount is 50% of the full disability benefit.

Residual Amount Benefit

Under a Partial Disability, the benefit is based on a proportion of the income lost because of partial disability. Therefore, a person who can't work 20% of the time because of a partial disability would receive 20% income benefit.

Residual disability

The insured has a total disability and returns to work but can only perform some of the duties he could perform prior to the disability. Synonymous with permanent partial disability.
The residual disability benefit differs from the partial disability bene

Recurrent Disability Provision

A disabling condition which returns within a specified period of time to be considered an extension of prior disability. The insured is not required to undergo another elimination period.

Nondisabling Injury

The benefit pays medical expenses caused by an accidental injury that does not cause total disability. This benefit does not pay disability income benefits. The benefit is a one-time payment that is limited to a percentage of the disability income benefit

Temporary Disability

A disability in which a person is prevented from working during recovery or rehabilitation, but is expected to fully recover.

Confining Disability

Disability which restricts a person to staying indoors.

Nonconfining Disability

Disability which does not restrict a person to staying indoors.

Additional Monthly Benefit (AMB) Rider

Offered by disability income insurers provides up to one year of disability income coverage, equal to what Social Security will pay, but before Social Security benefits have begun. The AMB usually begins during the Social Security disability waiting perio

Social Insurance Supplement (SIS)/Social Security Rider

Rider intended to supplement workers compensation benefits and other social insurance programs. The SIS pays a benefit equivalent to what Social Security disability would pay, but if Social Security actually begins to pay the insured, the SIS benefit is r

Cost of Living Adjustment (COLA) Rider

This rider automatically increases the insured's disability income benefits after the insured has been receiving benefits for at least 12 months.

Guaranteed Insurability Rider

Similar to the provision found in life insurance. It allows the insured to buy additional disability income coverage without proving evidence of insurability. The insured's earned income must be higher to justify the additional coverages.

Relation of Earnings to Insurance

The relation of earning to insurance provision restricts the insured's disability income benefit to an amount based on earned income during the past two years.

Hospital Confinement Rider

Optional benefit which waives the elimination period of a disability income policy if the insured requires inpatient hospitalization.

Lifetime Benefits Provision

Provision in disability income policies which prolongs the benefit period to the duration of the insured's life.

Rehabilitation Benefit

Provides job training coverage to an insured with total disability so he can return to work.

Medical Reimbursement Benefit

Pays medical expenses for nondisabling injuries.

Short-term disability income policies

Disability income policies with benefit periods of less than two years. The elimination period is typically no more than 30 days. The benefit amount is 60-80% of the insured's income and benefits are generally paid on a weekly basis. Therefore, short-term

Long-term Disability Income Policies

Disability income policies with benefit periods of two years or more. The elimination period ranges from 30 to 180 days. Long-term disability income policies may coordinate benefits with an employer plan, Workman's Compensation or Social Security.

Key Person Disability Income

Pays periodic income benefits to businesses when a key employee is disabled including business owners, stockholders, and executive managers who are active in the company.
The amount of the disability income benefit is based on the key person's economic va

Disability Buy-Sell Policy

Business disability insurance policy that establishes how ownership in a business is transferred upon an owner's disability.

Business Overhead Expense (BOE)

Policies created to help small business owners pay overhead expenses and keep the business operating when the owner becomes disabled. The business owner owns the policy and pays the premiums, but the benefits are used to pay the business' expenses such as

Disability Reducing Term Disability Policy

Business disability policy that pays off a business loan if the owner becomes disabled.

Coordination of Benefits

Claims payment process in which a person is insured under multiple health plans providing coverage for the same loss.

Elimination Period

Optional provision in health insurance policies which states the length of time between when sickness, accident, or disability begins and when benefits become payable. Often referred to as a "time deductible.

Own Occupation

Definition used to establish total disability. The insured must be unable to perform the work duties of his Own Occupation. Less restrictive than the Any Occupation definition of total disability.
Coverage is limited to the first two years after the disab

Any Occupation

Definition used to establish total disability. The insured must be unable to perform the work duties of any occupation for which he is qualified by education, experience, or training. More restrictive than the own occupation definition of total disability

Total Disability

Requirement for full disability income benefits, typically inability to perform work duties. Each policy defines total disability differently.

Pure Loss of Income

Or "income replacement contracts" pay the insured a portion of his earned income while disabled. Income replacement contracts do not require the insured to endure a period of total disability before benefits are paid. These policies tend to be more afford

Presumptive Disability

A condition, such as loss of sight, hearing, speech, or the use of arms or legs, which qualify as total disability, regardless of ability to work.

Loss of Earnings Disability Test

Disability income policy that specifies the own occupation definition of disability for the first few years of disability after which the any occupation disability takes over.

Accidental Means

Restrictive definition of accident in which the cause of the accident must be unintentional and unexpected. The accidental means definition can be thought of as a "cause and effect" test.

Accidental Bodily Injury

Definition of accident in which the injury is unintentional and unexpected. Policies using this definition cover all injuries except self-inflicted injuries. This more liberal definition can be thought of as a "results only" test.

Probationary Period

Occurs from the policy effective date and extends for a period of time such as 15 or 30 days. The waiting period for accidents may be different than for sickness. During the probationary period, benefits are not payable for sickness but usually are payabl

Elimination Period

A "time deductible" specifying a period of time beginning immediately upon a disability when benefits are not payable, typically ranging from 30 to 180 days or more.
The purpose of the elimination period is to prevent the insurer from paying short-term di

Benefit Period

The period of time disability income benefits will be paid to the insured after the elimination period is fulfilled.
May be one year, two years, five years, or until the insured reaches the age of 65 (retirement age).

Delayed Disability

Provision that allows a stated period of time to lapse after an accident before the onset of a disability, after which period the insured is still eligible for benefits. This stated period may be 30, 60, or 90 days.

Partial Disability

The inability to perform one or more work duties of a person's own occupation, or inability to work full-time.

Flat Amount Benefit

Under a Partial Disability, a specific amount is stated in the policy. Typically, the amount is 50% of the full disability benefit.

Residual Amount Benefit

Under a Partial Disability, the benefit is based on a proportion of the income lost because of partial disability. Therefore, a person who can't work 20% of the time because of a partial disability would receive 20% income benefit.

Residual disability

The insured has a total disability and returns to work but can only perform some of the duties he could perform prior to the disability. Synonymous with permanent partial disability.
The residual disability benefit differs from the partial disability bene

Recurrent Disability Provision

A disabling condition which returns within a specified period of time to be considered an extension of prior disability. The insured is not required to undergo another elimination period.

Nondisabling Injury

The benefit pays medical expenses caused by an accidental injury that does not cause total disability. This benefit does not pay disability income benefits. The benefit is a one-time payment that is limited to a percentage of the disability income benefit

Temporary Disability

A disability in which a person is prevented from working during recovery or rehabilitation, but is expected to fully recover.

Confining Disability

Disability which restricts a person to staying indoors.

Nonconfining Disability

Disability which does not restrict a person to staying indoors.

Additional Monthly Benefit (AMB) Rider

Offered by disability income insurers provides up to one year of disability income coverage, equal to what Social Security will pay, but before Social Security benefits have begun. The AMB usually begins during the Social Security disability waiting perio

Social Insurance Supplement (SIS)/Social Security Rider

Rider intended to supplement workers compensation benefits and other social insurance programs. The SIS pays a benefit equivalent to what Social Security disability would pay, but if Social Security actually begins to pay the insured, the SIS benefit is r

Cost of Living Adjustment (COLA) Rider

This rider automatically increases the insured's disability income benefits after the insured has been receiving benefits for at least 12 months.

Guaranteed Insurability Rider

Similar to the provision found in life insurance. It allows the insured to buy additional disability income coverage without proving evidence of insurability. The insured's earned income must be higher to justify the additional coverages.

Relation of Earnings to Insurance

The relation of earning to insurance provision restricts the insured's disability income benefit to an amount based on earned income during the past two years.

Hospital Confinement Rider

Optional benefit which waives the elimination period of a disability income policy if the insured requires inpatient hospitalization.

Lifetime Benefits Provision

Provision in disability income policies which prolongs the benefit period to the duration of the insured's life.

Rehabilitation Benefit

Provides job training coverage to an insured with total disability so he can return to work.

Medical Reimbursement Benefit

Pays medical expenses for nondisabling injuries.

Short-term disability income policies

Disability income policies with benefit periods of less than two years. The elimination period is typically no more than 30 days. The benefit amount is 60-80% of the insured's income and benefits are generally paid on a weekly basis. Therefore, short-term

Long-term Disability Income Policies

Disability income policies with benefit periods of two years or more. The elimination period ranges from 30 to 180 days. Long-term disability income policies may coordinate benefits with an employer plan, Workman's Compensation or Social Security.

Key Person Disability Income

Pays periodic income benefits to businesses when a key employee is disabled including business owners, stockholders, and executive managers who are active in the company.
The amount of the disability income benefit is based on the key person's economic va

Disability Buy-Sell Policy

Business disability insurance policy that establishes how ownership in a business is transferred upon an owner's disability.

Business Overhead Expense (BOE)

Policies created to help small business owners pay overhead expenses and keep the business operating when the owner becomes disabled. The business owner owns the policy and pays the premiums, but the benefits are used to pay the business' expenses such as

Disability Reducing Term Disability Policy

Business disability policy that pays off a business loan if the owner becomes disabled.

Coordination of Benefits

Claims payment process in which a person is insured under multiple health plans providing coverage for the same loss.