Do you understand how disability insurance works? Many people associate this type of insurance with accidents, but many disabilities result from diseases. Learn how this lesser-known coverage can protect your income if you become unable to work.
What is disability insurance?
Disability insurance is a financial product that pays you a percentage (typically 50% to 70%) of your typical income if you become unable to work for a reason the policy covers. For example, some policies don’t cover self-inflicted injuries or mental illness.
The best policies provide benefits when you can’t work at your own occupation. By comparison, an any-occupation policy could require you to work at a different job that can accommodate your disability, then partially make up the difference.
You can get disability insurance through a group, such as your employer or professional organization. This coverage is typically the most affordable and may not require medical underwriting, but you could lose it if you change employers.
You can also purchase an individual policy. This coverage often costs more and does require medical underwriting, but you can keep it no matter where you work as long as you pay the premiums.
How does disability insurance work?
Disability insurance typically has a waiting period. During the first month or more of your disability, you will not receive any income from your policy, so it’s important to have emergency savings.
After that, you will receive a regular income from your policy until your disability ends or your benefits run out, whichever comes first.
Should you buy disability insurance?
If you don’t have the financial resources to support yourself and any dependents for the rest of your life, it’s a good idea to carry disability insurance. We can help you understand your existing coverage or get quotes for an individual policy—just ask.