Disability Income Insurance Law and Legal Definition

Disability income insurance is the insurance coverage for a portion of lost income when an employee is incapable of performing one or more occupational duties as a result of an illness or accident temporarily, or totally. The payment usually starts after a specific period known as elimination period.

Some policies will be in force until the person is able to return to work, or to a similar occupation, or becomes eligible to receive benefits from another program such as Social Security disability. Disability insurance payments are normally tax-free to beneficiaries as long as they paid the policy premiums. Many employers offer disability income insurance to their employees.