DEFINITION of 'Disability Insurance'

A program managed by the Social Security Administration that insures a worker in case of a mishap. Disability insurance offers income protection to individuals who become disabled for a long period of time, and as a result can no longer work during that time period. Employees who've paid the Federal Insurance Contributions Act (FICA) tax for a certain amount of time, are eligible to receive the Social Security disability income insurance.


Also referred to as disability-income insurance.

BREAKING DOWN 'Disability Insurance'

The Federal Insurance Contributions Act (FICA) is a United States law that requires employees to contribute a part of their earnings to fund Medicare and Social Security. Employees who have become disabled can receive this income insurance for at least one year. Income insurance payments begin on the sixth month of disability.

RELATED TERMS
  1. Disability Insurance Trust Fund

    An account within the Social Security Trust Fund used to pay ...
  2. Any-Occupation Policy

    A term used in the insurance industry to refer to a specific ...
  3. Total Permanent Disability (TPD)

    Total permanent disability (TPD) is a condition in which an individual ...
  4. Federal Insurance Contributions ...

    Federal Insurance Contributions Act (FICA) is a US payroll tax ...
  5. Social Security Benefits

    Social security benefits are funds that are received by retired ...
  6. Social Security

    Social Security is a part of a social insurance and welfare program ...
Related Articles
  1. Financial Advisor

    Disability and Business Overhead Coverage for the Self-Employed

    What every small business owner or professional needs to know about individual and business overhead disability income insurance plans.
  2. Insurance

    Group and Individual Disability Insurance: What You Need to Know

    What you need to know about group and individual disability income coverage.
  3. Retirement

    Social Security: More Than Retirement Benefits

    Social Security offers a lot more than just retirement benefits.
  4. Insurance

    Disability Insurance For Business Owners

    If you become injured and no longer able to work, would your business survive?
  5. Retirement

    Social Security Benefits for Children: How They Work

    There are millions of children in tough situations who receive Social Security benefits each month to help with finances. Here's who qualifies.
  6. Insurance

    Using Insurance in a Business Succession Plan

    How to use life and disability insurance to help fund a business succession or buyout plan.
  7. Retirement

    Types Of Social Security Benefits

    Social Security isn't just for the retired. It also pays benefits to the disabled, widows and widowers, children, stepchildren, divorced spouses and more.
  8. Insurance

    Insurance for Millennials

    Four insurance must-haves – and one maybe – for Generation Y
  9. Insurance

    Bundle Your Insurance For Big Savings

    Bundling your insurance can save you money and time. Read on to see how get the most out of multiline insurance discounts.
RELATED FAQS
  1. Is there a limit on the amount of disability insurance that I can buy?

    Disability insurance policies are designed to partially replace your income in the event that you become disabled and cannot ... Read Answer >>
  2. What is disability-income insurance?

    Disability-income insurance is insurance that provides financial benefits to a policyholder in the event of sickness or injury ... Read Answer >>
Hot Definitions
  1. Financial Industry Regulatory Authority - FINRA

    A regulatory body created after the merger of the National Association of Securities Dealers and the New York Stock Exchange's ...
  2. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
  3. Cost of Goods Sold - COGS

    Cost of goods sold (COGS) is the direct costs attributable to the production of the goods sold in a company.
  4. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and expenses incurred during a specified period of time, usually ...
  5. Monte Carlo Simulation

    Monte Carlo simulations are used to model the probability of different outcomes in a process that cannot easily be predicted ...
  6. Price Elasticity of Demand

    Price elasticity of demand is a measure of the change in the quantity demanded or purchased of a product in relation to its ...
Trading Center