Taking a Look at the Types of Disability Benefits

In the past, the only type of disability benefits one could get was through the church or other community-based charitable organization. Food pantries fed the hungry, ran donations for the homeless and contributed funds to individual families in need.

This all changed in 1935, when Franklin D. Roosevelt passed the Social Security Act as part of the "New Deal" to help minimize the devastation caused by the Great Depression. Later, this act was amended to include Medicaid and Medicare by Lyndon B. Johnson as part of his "Great Society" legislation in 1965. Today, there are multiple types of disability insurance policies in the United States.

One type of available disability benefits is covered by national social insurance programs. In the U.S., there are two types of federal assistance programs: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). According to the Social Security Administration, these large "safety net" benefits kept 40% of older American recipients out of abject poverty.

SSDI benefits are for those people who have worked 5 out of the last 10 years, who earn less than $980/month and who are prohibited from earning any gainful income because of a physical or mental problem. SSI benefits are for people who can demonstrate extreme financial hardship (less than $674/month) and are 65+, or are blind or disabled.

Another type of disability benefits can be purchased as individual disability insurance. These plans are designed to replace 40-60% of one's income should disability strike. Some of the top companies offering private disability insurance include MetLife, Northwestern Mutual and Unum.

When evaluating policies, individuals should look at variables, like waiting periods, benefit pay-outs, cancellation policies and cost-of-living adjustment options. Some disability income insurance will even allow claimants to return back to work part-time or at a different position and still collect benefits, which can help supplement household income even more.

Just 40% of the millions who apply for social security benefits are approved each year, which underscores the need for employees to look into individual disability insurance or employer-based benefits. Even if a person is initially rejected for federal or state disability benefits, he or she is eligible to appeal the original decision up to four times.

In fact, most disability benefits are not awarded until a reconsideration process fails to prove fruitful and a court hearing with an administrative law judge is scheduled. Sometimes it can take over a year to win a disability insurance claim, so it's up to individuals to ensure all avenues of financial assistance are sought to keep their households afloat during the waiting process.