April 28, 2013
Compare and Contrast of Life and Disability Insurance
Death and disability are difficult subjects for most families to discuss, but insuring against both is an important part of safeguarding a family’s future. Most people recognize the value of life insurance and will have at least a nominal amount, possibly taken out at the time of marriage or the birth of children. Disability, however, is not something many view as necessary insurance, even though our chances are 33% higher each year of becoming disabled than of dying. (Bajtelsmit & Rastelli, 2012) Both types of insurance safeguard a family’s future. Life insurance is paid out when a policy holder dies and can offer vital relief to a surviving spouse with children to raise. Similarly, if one parent is seriously injured and cannot return to work, disability insurance can assist financially to help keep that family afloat during this unexpected crisis. Both types of insurance have restrictive clauses. For instance, life insurance may specify certain forms of death do not qualify to collect on the policy. Similarly, disability insurance may be restrictive as to working a specific job or any job at all. Large employers often offer life and disability insurance as part of their benefit options. Some employers offer short term disability at no charge to their employees. Short term is when a person is sick or injured and expected to be off the job for more than a few days. They may be required to use all their sick days and vacation days, before the short term disability will be applied. When it is, it will generally be around 60% of the employee’s income. Similarly, companies often offer a certain amount of life insurance to their employees at no cost. (Bajtelsmit & Rastelli, 2012) Another similarity between life and disability insurance is that companies will often have special group...