A DISABILITY insurance policy pays benefits when you are unable to work because of injury or illness. This allows you to meet your financial obligations, such as mortgage payments, or medical bills, while unable to work. Disability policies usually pay a fixed amount for a set period of time, such as five years or up to age 65. The amount paid is usually 40 percent to 60 percent of your income.
Disability policies have different definitions of disability. Some policies pay benefits if you are totally disabled from your usual occupation. Some policies do not pay benefits even if you are totally disabled from your usual occupation, if there are any other occupations for which you are qualified that you can still perform.
