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. Credit Insurance

    Credit insurance is a type of insurance that pays off one or ...
  3. Elderly and Disabled Credit

    The Elderly and Disabled Credit is a non-refundable tax credit ...
  4. Business Continuation Insurance

    Business continuation insurance helps companies minimize the ...
  5. Federal Insurance Contributions ...

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

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

    How to Help Clients Who Have Become Disabled

    Disability can strike a client any time. Advisors should make sure clients are adequately insured against this risk and know what benefits are available.
  2. Managing Wealth

    Top 6 Features Of A Great Disability Policy

    Many people consider buying life insurance, but few think to prepare themselves from long-term illness or disability. Find out how to shop for disability insurance and protect yourself from financial ...
  3. Personal Finance

    Protecting Against Income Loss With Insurance

    Having an emergency fund and the appropriate insurance for your stage of life helps protect against unexpected loss of income.
  4. Retirement

    What If Social Security Disability Runs Out Of Money?

    The social security disability program is nearly bankrupt and could run out of money by 2016.
  5. Personal Finance

    Why Having an Emergency Fund Is Essential

    Do you know how you’d pay the bills if you lost your job, had a health crisis or needed a major car repair? That's why an emergency fund is essential.
  6. Retirement

    Social Security Disability Benefits vs. Retirement Benefits

    Here's how to know if you should file for Social Security retirement vs. disability benefits.
  7. Financial Advisor

    How to Manage SS Disability & Retirement Benefits

    Advisors with clients who receive disability benefits can carve out a profitable niche by helping them integrate this income into a financial plan.
  8. Taxes

    The New Tax-Free Savings Accounts For the Disabled

    Due to the Achieving a Better Life Experience (ABLE) Act, many people with disabilities will have an easier time financing their lives, starting in 2016.
  9. Insurance

    Group and Individual Disability Insurance: What You Need to Know

    What you need to know about group and individual disability income coverage.
  10. Insurance

    4 Types Of Insurance Everyone Needs

    Here are four forms of insurance that are vital to have.
RELATED FAQS
  1. Are My Social Security disability benefits taxable?

    In some situations and in some states, your Social Security disability benefits are taxable. Read Answer >>
Hot Definitions
  1. Gross Margin

    A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
  2. Inflation

    Inflation is the rate at which prices for goods and services is rising and the worth of currency is dropping.
  3. Discount Rate

    Discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from ...
  4. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  5. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  6. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
Trading Center