Disability insurance,
often called disability income insurance, is a form of insurance that insures
the beneficiary's earned income against the risk that disability will make
working (and therefore earning) impossible. In other words, it answers the
question, "How would I pay for my living expenses if I became unable to work?"
National social insurance programs
In most developed countries, the single most important form of disability
insurance is that provided by the national government for all citizens. For
example, the UK's version is part of the National Insurance; the U.S.'s version
is Social Security (SS)—specifically, several parts of SS including
Social Security
Disability Insurance (SSDI) and Supplemental Security Income (SSI). These
programs provide a floor beneath all the other piecemeal forms of disability
insurance in our societies. In other words, they are the safety net that catches
everyone who was either (a) otherwise uninsured or (b) otherwise underinsured.
As such, they are very large, very important programs, with many beneficiaries.
The general theory of the benefit formula is that the benefit is not large but
is enough to prevent abject poverty.
Employer-supplied disability insurance
Since one of the top reasons for becoming disabled is getting hurt on the job,
it is not surprising that the second-most important form of disability insurance
is that provided by employers to cover their employees. There are several
subtypes that may or may not be separate parts of the benefits package: workers'
compensation and more general (but very basic) disability insurance policies.
Workers' compensation
Workers' compensation (also known by variations of that name, e.g., workman's
comp, workmen's comp, worker's comp, compo) offers payments to employees who are
(usually temporarily, rarely permanently) unable to work because of a
job-related injury. However, workers' compensation is in fact more than just
income insurance, because it may pay compensation for economic loss (past and
future), reimbursement or payment of medical and like expenses (functioning in
this case as a form of health insurance), general damages for pain and
suffering, and benefits payable to the dependents of workers killed during
employment (functioning in this case as a form of life insurance)
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