Taking Cover

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Q: Because of the recent terrorist tragedies, my husband and I have been discussing disability coverage. We both already have disability coverage from work as well as worker’s compensation. Do we need additional insurance?
–K. John, Jacksonville, Florida

A: Only you and your husband can determine whether you need additional coverage. Unfortunately, many employees do not understand what coverage they have until it’s time to collect, and then it may be too late.

Worker’s compensation pays for injuries sustained on the job, or for occupational illnesses. For example, if you have been exposed to a chemical at work that has contributed to ill health, you would be eligible to collect. Depending on state regulations, it is paid two ways–as a salary for a particular time or as a lump sum. “The benefit level is helpful,” says Jeanne M. Salvatore, vice president of consumer affairs for the Insurance Information Institute (III), “but it can be relatively low. It is usually 60% to two-thirds of an average weekly salary, and then only up to a specific amount.”

Disability insurance covers a worker who is injured anywhere, on or off the job, whether or not it is work related. While most companies are required by state law to also purchase disability insurance for their employees, the benefit level is also low and is usually paid for a short period of time.

“The younger you are, the more likely you are to become disabled than you are to die,” explains Salvatore. “If you can’t work, who will take care of you? Buying a personal disability insurance policy will pay you an income.”

There are two types of disability insurance (short-term and long-term) with two types of terms (noncancelable and guaranteed renewable). For information, log onto www.iii.org or call the National Insurance Consumer at 800-942-4242.