Disability Insurance
This section provides what you'll need to know to protect you, from the basics of coverage to filing a claim.
What is disability insurance?
Disability insurance pays benefits when you are unable to earn a living because you are sick or injured. Like all insurance, disability insurance is designed to protect you against financial disaster. Most disability policies pay you a benefit that replaces part of your earned income (usually 50 to 70 percent) when you can't work.
Why would you need disability insurance?
Your chances of being disabled for longer than three months are much greater than your chances of dying prematurely. One reason for this is that medicine has made many illnesses and injuries treatable and life sustaining which previously had life ending consequences. Although this is great news for us all, it increases your need to protect your income with disability insurance.
While you are working
Everyone who works and earns a living should consider purchasing disability insurance. What would happen if you suffered an injury or illness, and couldn't work for days, months, or even years? If you're single, you may have no other means of support. If you're married, you may be able to rely on your spouse for income, but you probably also have many financial obligations, such as supporting your children and paying your mortgage. Could your spouse's income support your whole family? In addition, remember that you don't have to be working in a hazardous position to need disability insurance. Accidents happen not only on the job but also at home, and illness can strike anyone.
If you're a business owner
If you own a business, disability insurance can protect you in several ways. First, you can purchase an individual policy that will protect your own income. You can also purchase key person insurance designed to protect you from the impact that losing an important employee would have on your business. Business overhead expense insurance ensures that if you get sick, your business will stay healthy. Finally, you can purchase a disability insurance policy that will enable you to buy your partner's business interest in the event that he or she becomes disabled.