What are the basic types of disability insurance?
There are three types of disability insurance policies. One type of insurance policy just pays you a monthly income if you become disabled due to an accident or an illness. It's usually in a monthly benefit ($2,000 $3,000 or $4000 a month)- whatever amount you buy, and whatever amount the insurance company approves you for. The second type of disability insurance policy is this: Should you have a business and you become disabled, you're still going to want to pay the rent for your office. You're still going to pay the electricity, your malpractice insurance, or your regular insurance premiums. You may have leases of equipment, you have key employees that you've had for many years. Your rent is obviously the largest expense for most businesses. All that stuff continues even if you become disabled. Your landlord of the building where your business is doesn't just say because you're disabled you don't have to pay him or her rent. So, this type of policy pays you a monthly income to pay for the overhead in your office. The other type of disability insurance is called disability buyout insurance. This is if a partner becomes disabled. That partner's stake in the business is paid off because the insurance comes in with a large check and pays off the person from the proceeds of the policy.
