Do disabilty policies cover both accident and sickness?

No. Policies are available to cover disability due to an accident only or due to either accident or illness. It could be wallet-wrenching if your policy differentiates between accident and sickness.

However, in addition to accident only and accident and illness policies, some insurers are now selling critical illness policies. These aren’t classic disability policies. They pay a lump sum benefit of $5,000 to $500,000 if you are diagnosed with certain illnesses. You don't have to be disabled or even employed to collect. Policies sometimes pay one lump sum and then pay a second time if the condition recurs. These policies typically have an “elimination period,” which is the time you must wait after diagnosis to receive benefits. If you die during this period, your estate receives no benefits. Conditions commonly covered by these policies include: Heart attack, stroke, kidney failure , paraplegia organ transplant, Alzheimer's disease, blindness, deafness, multiple sclerosis coma, coronary artery bypass graft, HIV (medical personnel only), aortic surgery, angioplasty, heart valve surgery, loss of sight/speech/hearing, severe burns, and cancers.