People become disabled in many different ways, and what causes the disability may affect the type of protection, if any, that is available. For example, injuries in the workplace will be covered under workers� compensation, which provides medical expenses, and persons losing their jobs as a result of such injuries will usually be eligible for unemployment compensation benefits. Such unemployment compensation benefits are usually limited to 26 weeks and therefore do not provide long-term protection against disability. If the worker was "disability insured" prior to the injury, disability benefits under social security will be payable after 6 months of disability. The very strict requirements for disability benefits under social security include the individual�s inability to perform the duties of any gainful employment. Even with this restrictive definition for benefits, the social security system paid disability benefits to 3.19 million persons in 1991. The Social Security Administration dispensed nearly $30 billion in 1991 to pay disability benefits.

There are five states that provide nonoccupational disability funds: California, Hawaii, New Jersey, New York, and Rhode Island. These programs vary from one state to another; California�s program is the most generous. Benefits in all five of these states are usually linked to the worker�s income level and number of dependents. The elimination period tends to be anywhere from one day to 7 days, and the limit on the benefit period tends to be anywhere from 26 weeks to one year. Private disability insurers in these states try to coordinate elimination periods of private coverage with the maximum benefits available under the state disability benefit program. Without coordination there is a

possibility of over-insurance, which may provide a temptation for some individuals to malinger rather than expedite the recovery process.

Automobile accidents are a leading cause of injury and disability in the United States. In those states having no-fault auto insurance coverage, disability payments are usually provided in the mandatory no-fault coverage. However, most states do not have no-fault disability benefits.

The federal government has extensive disability income provisions for military personnel and civil servants. These programs provide very generous benefits, and individuals covered by these programs would not be candidates for private disability insurance coverage.

Many employers in the private sector provide some sort of sickness pay or salary continuation covering short-term disabilities. Benefits are often limited to a period of 2 weeks to a maximum of 26 weeks. If the employer offers disability benefits beyond 26 weeks, they are typically through disability income coverage provided by the employer as an employee benefit. Disability income coverage is usually classified as either short-term or long-term disability coverage. Short-term disability coverage is generally defined to be that with a benefit-period limitation of fewer than 5 years. Short-term disability policies have a much lower premium than long-term policies and are therefore much more popular among employers providing disability coverage. It is estimated that less than 50 percent of the work force enjoys short-term disability coverage and that less than 20 percent is insured for long-term disability. The cost of providing short-term disability coverage is usually 2 percent to 4 percent of payroll, while long-term disability coverage runs 2.5 percent to 6 percent of payroll for most private-sector employers. The lower end of the premium range is associated with longer waiting periods, and the higher premiums are associated with the shortest waiting periods.

The majority of the work force has no long-term disability protection unless their disability is so severe that they qualify for social security benefits. Individual disability income policies are available generally to those persons in middle-income or high-income occupations with low-risk classifications. There are many high-risk occupations for which disability income coverage is either hard to obtain or nonexistent. Very little disability income coverage is in force for low-income individuals because their low discretionary income usually puts disability income premiums beyond their reach. Disability income coverages are generally designed for people with incomes in excess of $20,000 per year. The coverage is based on occupation, and premiums vary from one occupation to another. Physicians, surgeons, dentists, lawyers, architects, accountants, and business executives without personal health problems find it easy to obtain disability income coverage. Agents specializing in disability income coverages often target self-employed individuals as a preferred market. This is probably in recognition of the fact that more than one-half of United States businesses employ fewer than 20 persons. These businesses are less likely to have disability income coverage in place than large employers with more than 1,000 workers.