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How to Insure Your Income: Injury and Sickness Benefits

Disability income benefits are paid for disabilities caused by accidental injury or sickness. While the benefit amount is usually the same for either cause of disability, the primary difference between coverage for accidents and sickness lies in the elimination period.

Elimination periods for sickness may range from seven days to one year. Frequently, accident coverage has a reduced elimination period or no elimination period.

Example: Sergio has total disability coverage with a 30-day elimination period for sickness. The same policy provides that benefits for a disability caused by accidental injury begin immediately (no elimination period). If Sergio contracts a disabling case of mononucleosis, he has to wait 30 days to begin collecting benefits. If he breaks his back playing softball, he can collect benefits right away.

Of the different definitions given to the term accident, there are two major ones: accidental bodily injury and accidental means.

Accidental bodily injury is defined as an injury (the result of an accident) that is unintentional and unforeseen.

Accidental means is an injury whose cause is unintentional. That is, the accident was not caused by any action taken by the injured person or by any activity performed by the injured person.

Example: Sandy strains her back carrying several heavy bags of groceries. This accident would be defined as accidental bodily injury, because Sandy did not intentionally strain her back. However, while the injury was caused by accident, it could not be defined as accidental means because the cause of the accident was foreseeable.

In other words, using reasonable judgment, Sandy could have foreseen that carrying too heavy a load could cause problems. If the policy under which Sandy was covered defined accident in terms of accidental means, she would not receive benefits.

On the other hand, if a dog runs in Sandy's path while she's carrying the groceries -- causing her to fall and break her arm -- she would be covered under the definition of accidental means. This is because the injury was caused by circumstances that could not reasonably be foreseen. Also, the cause of the fall was not based on any action taken by Sandy, or on any activity in which she was engaged.

Because accidental means is such a restrictive definition, it is used less often than it once was.

Sickness or illness may not be defined in any manner that is more restrictive than sickness or disease that first manifests itself after the effective date of the policy. However, if a disability policy provides non-occupational coverage only, the definition of sickness may exclude work-related disabilities.

Example: Laura applies for and is issued a disability income policy with an effective date of May 1. About a month later, she begins to have a digestive problem that is subsequently diagnosed as a gall bladder problem requiring surgery.

Medically, her symptoms first appeared after the effective date of the policy and, thus, the sickness claim would be honored by the insurance company.

An alternative example: Laura begins to have the digestive problem on May 1. She contacts her doctor and he suggests that she take some antacid medication which she purchases from her local drug store. By June 1, the problem appears to be no better, but Laura does nothing about it. She buys a disability income policy with an effective coverage date of July 1. A month later, she consults with her doctor -- who diagnoses her gall bladder problem.

Even though the diagnosis occurred after the effective date of the disability income policy, the symptoms appeared prior to the effective date. Should a claim arise and all the facts become known, the insurance company could determine that the gall bladder problem preexisted the effective date of the insurance and deny the claim.

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