Disability insurance 101: Income protection basics and common terms

A man and woman learning about disability income income insurance.

Your income pays for pretty much everything, from housing and utilities to food and childcare and much more. If you’re like most people, being without income because of an unexpected illness or injury could have serious financial consequences.

That’s where disability insurance—also known as income protection—comes in. It’s like a back-up plan to help protect your income if you’re too sick or hurt to work. Get more information about what disability insurance is, why it’s important to your financial security, and learn some common terms.

What is disability insurance?

Think of it as insurance for your income. Just like auto or homeowner’s insurance helps you financially when something unexpected happens to your car or house, disability insurance does something similar for your income. You’ll receive a set amount each month “like a paycheck” if you’re too sick or hurt to work.

Common disability insurance terms to know

As you learn more about protecting your income—or if you purchase a disability insurance policy—you’ll likely come across some language that’s unfamiliar. Review these common terms to get up to speed:

Definition of “disability”

Guidelines used by the insurance company to determine if you’re disabled and eligible to receive money from your disability policy.

Elimination period

Often called a “waiting period,” it’s the number of days you’ll wait before receiving monthly payments.1

Benefit period

This is how long you receive money from your disability policy while you’re not able to work.

Benefit payment

The amount of money you receive each month. It helps replace your lost income when you’re unable to work.

Insured

The person who’s protected by the insurance policy. In most cases, this is you.

Rider

A feature you can add to your policy to enhance benefits.

Premium

What you pay each month for coverage while you’re healthy and working.

Underwriting

Guidelines the insurance company follows to see if you qualify for income protection, how much you can buy, and what it’ll cost.

Claim

The process of communicating your disability with the insurance company. It typically requires paperwork from both you and your doctor.

Next steps

Learn more about income protection and disability insurance. Explore your disability insurance options.

1 You begin receiving benefit payments one month after you satisfy the elimination period.

Disability income insurance also has limitations and exclusions. For specific costs and complete details of coverage, contact your Principal Life representative. Oregon policy #HH750OR.

Disability insurance from Principal® is issued by Principal Life Insurance Company, Des Moines, IA 50392.

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