Disability insurance pays part of your income if you become too sick to work (any job, not just your current one). Most policies pay about 60 percent of your salary for a certain amount of time.
Many employers provide disability insurance. You can also buy disability insurance on your own or add to the disability insurance that your employer provides.
If you are employed, check the details of the coverage provided by your company. Some people are covered by Social Security disability payments. You can get an estimate of these payments, which depend on your salary and years of work, from a local Social Security office. (To find an office near you, visit the Social Security Administration website.)
Buying or choosing disability insurance
If you are buying or choosing disability insurance, check the following:
- How the term “disability” is defined
- The extent of disability (partial or total) before payments begin
- Residual benefits (partial payments if you are able to work, but in a more limited way that causes a decrease in income)
- Presumptive disability (for loss of sight, speech, hearing or use of limbs, even if you can continue to work)
- Size of monthly benefits
- When payments begin (between one and 6 months after the disability)
- Length of coverage (one or more years, or all working years until retirement)
- Cost-of-living adjustments to keep pace with inflation
- Whether you can renew the policy (non-cancelable policies, guaranteed renewable policies or conditionally renewable policies)