Disability Insurance
Disability Insurance is designed to protect you in the unfortunate event that you are not able to work due to an injury or sickness. No one expects to experience a disability, but it is actually rather common. In fact, an April 1996 edition of Money magazine indicated that “4 out of 10 workers will become disabled for more than 90 days at some point in their working lives.” Forty percent!
Disability Insurance (also known as Income Replacement Insurance) falls into two categories. You can often buy this coverage through work. These policies are covered by a federal law known as ERISA. However, many people buy Disability coverage on their own, outside of work. These are individual insurance policies (even if they are bought from a professional group or through some organization to which you belong, like AAA, AARP, etc.), and they are not subject to ERISA. Instead, these individual insurance policies are covered by state law, and are often called "First Party" cases.
Other types of individual disability insurance policies are covered by state law as well. For example, you may have credit disability (on your mortgage, car loan, or credit cards) which makes payments while you are disabled.
