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Disability benefits vs. disability insurance

Imagine that you have a debilitating injury or illness. Because of your new condition, you are unable to work, possibly even for the rest of your life. Now consider your options for compensation. Do you know which ones you are eligible for or how to access them? Would you be like a lot of Americans and seek the help of a skilled lawyer because of the complexity of the situation ahead?

We wanted to start this week's post with this scenario because while some of our more frequent readers have an idea of what they would do in this situation, we know that this may be some readers' first time visiting our site. For our newcomers, a sudden disability could leave their head swimming and asking a lot of questions about their rights as well.

In order to address this properly, our readers should know that how the injury or illness occurred and the extent of the condition will help determine which benefits a person should seek. While it may seem obvious to apply for workers' compensation benefits for a work-related injury, the distinction between disability benefits and disability insurance may be less obvious. Let's take a look.

Disability insurance is typically obtained through private insurance and can cover both short-term and long-term disability. This insurance policy offsets costs associated with medical treatments as well as time away from work. It's important to point out though that sometimes these policies can be expensive and may not cover pre-existing conditions.

On the other hand though is Social Security disability. Instead of paying an insurance company, benefits from SSD come from the Social Security taxes paid from each worker's paycheck. If a person has worked at least five of the last 10 years and meets the SSA definition of disability, then they may apply for these helpful benefits. It's worth pointing out though that SSD is not paid out for temporary disabilities.

Although both programs provide benefits to a disabled person, both work slightly different and pay out benefits differently depending on a person's situation. This is something all of our New York readers should keep in mind, whether you're new to our blog or not.

Source: CBS News, "Should you have disability insurance?" Stacy Johnson, Dec. 9, 2014

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