If you and your family rely on your income, disability insurance can help provide financial stability if you’re unable to work due to a disability. While many think their chances of becoming disabled are slim, the reality is that 1 in 4 Americans live with disabilities.
You never know when you might suffer a disability, so take steps to protect your family now.
What is disability insurance
Disability insurance is coverage that replaces part of an employee’s income when they are unable to work due to an illness or disability. Disability insurance provides benefits that cover on average up to 60% of an employee’s salary.
Buy at work or on your own
Work-based disability insurance is convenient to purchase and can be quite reasonable. The downside: The coverage may not be portable, and you may have to forfeit it if you change jobs. What’s more, only about a quarter of private sector workers have access to short- and long-term disability coverage.
An individual disability insurance policy may have more flexibility and give you more options. It stays in place no matter how often you change jobs, and you can choose the period of time you want coverage in place.
- Short-term disability insurance: As the name implies, this type of policy makes up for lost income for six months or less. It typically kicks in after you’ve exhausted other workplace benefits like paid time off and sick leave.
- Long-term disability insurance: If your disability lasts longer, you’ll need to move to long-term disability. This policy pays a portion of your income, typically 50% to 70%, for periods of a few years or until retirement, depending on the type of policy you have.