Disability insurance is also called income replacement insurance. It provides the insured with a recurring payment in case she or he ever become disabled and can no longer execute regular daily chores in a manner defined in the policy itself.

These are the most general 3 groups of disability insurance:

Any Occupation - Total disability to perform any occupation occurs when the insured is incapable to work at absolutely any occupation anymore. Therefore, if you are employed as a real estate agent, and your disability prevents you from performing your regular job, but you can still gainfully work as a checkout clerk in a local store -- you will not see any money as a benefit from your insurance company.

Regular Occupation - Under this definition, total disability is your being unable to perform at your regular occupation due to illness or an injury.

Own Occupation - This definition is the gold standard. Under this definition, total disability means your inability to work at your usual occupation regardless whether one can get employment in another gainful way.

All else remaining equal, the more specific the definition of disability, the dearer the payment. This is fair because your insurer bears a greater likelihood of paying out your insurance claim.

As for Critical Illness insurance, it pays out a lump sum in case you are diagnosed with a critical illness which is covered by the policy. The policy will usually cover from as few as 3 to 25 critical illnesses. The definitions do not vary among insurers. However, it is always best to get in touch with a broker that works with more insurance carriers.

The other difference is that Critical Illness claim fulfillment is not dependent on your ability to perform work and the premiums are most likely going to remain level for 10 years, 20 years or to age 75 or age 100 respectively. If you are hoping for a longer premium guarantee period, you will have come to terms with a higher initial premium.

This article is free for republishing

About Author
Prepared by Lorne S. Marr. His firm, LSM Insurance, deals with many insurers, like Standard Life Insurance