For those who have always had good health, it can be difficult to understand the challenges that people with health problems or disabilities face in their everyday lives. Even trying to imagine what your life would be like if something happened to you is tough. If you were to lose your eyesight or were unable to walk, for instance, what would you need in order to continue doing your job? Would you be able to continue in your chosen line of work at all, or would you have to change occupations to something more manageable? Because it's so scary to think about how you would handle your life if you were disabled, many people simply choose not to consider it unless it actually happens to them.
From a financial perspective, if you become disabled, there are a number of potential sources of support to help you adapt to your new circumstances. Although money may not be able to give you your old life back, it can help ease some of the burdens that often come with a disability, including high medical bills and reduced income. Knowing the potential resources you have may help you decide whether to take steps now to prepare for a possible disabling accident in the future.
Disability insurance
One way to protect against the potential financial impact that a disabling injury may have is to obtain disability insurance. In general, there are two ways you can get a disability insurance policy: as an employee benefit from your employer, or directly through an insurance company. Although group policies tend to be somewhat less expensive than obtaining private insurance directly, many employers don't offer disability insurance to their employees. A study by the Actuarial Foundation showed that only 36% of all full-time employees had access to long-term disability insurance through their employers.
Disability insurance falls into two categories. Short-term disability insurance will pay you a certain percentage of your salary if you become temporarily disabled due to serious illness or injury. Depending on specific policy provisions, there may be a delay of several days before coverage begins, and the maximum length of time that you can receive benefits usually ranges from 13 to 26 weeks. The main purpose of short-term disability insurance is to replace lost income while you recover from a temporary illness or injury; the key is that you generally expect to recover fully from whatever happened to you.
The other type of insurance is long-term disability, which covers permanent disabilities and provides benefits that can extend for periods of years or even decades. Like short-term disability insurance, a long-term policy replaces a percentage of your salary if you can no longer work because of an illness or injury. If you are permanently disabled and unable to work in any capacity, then depending on the type of coverage you have, a long-term disability policy may pay benefits until you turn 65. If your disability allows you to work but forces you to take a job that pays substantially less than your previous job, then you'll receive benefits based on the reduction in income that you suffered due to your disability.
If you have disability insurance through your employer, you should read through your policy to understand the benefits you will receive if you're disabled. If you're not fortunate enough to have an employer that offers disability insurance, however, getting your own policy may make sense, especially for long-term coverage. Some of the companies that offer disability insurance include Hartford (NYSE: HIG ) , MetLife (NYSE: MET ) , and Cigna (NYSE: CI ) . While you may be able to accumulate an emergency fund or other savings that would let you survive a temporary disability for a number of months, few people have the financial resources to deal with a substantial or complete loss of income over a period of years.
Disability coverage through private insurance companies represents a large and dependable source of potential funding if you're disabled. However, private insurance isn't the only way in which disabled people can obtain the means to support themselves. A number of government programs also provide benefits to help disabled people. The second part of this article looks at these programs in more detail.
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Fool contributor Dan Caplinger has worked with disabled clients across the income spectrum. He doesn't own shares of the companies mentioned in this article. The Fool's disclosure policy won't hit you when you're down.
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