Individual Disability Insurance

Disability insurance pays benefits if you are disabled and unable to work because of an accident, illness or injury. If you depend on your income to pay the bills or maintain your lifestyle, you should consider disability income protection. A percentage of your earned income is covered. Generally speaking, the benefits paid on an individually owned disability income insurance policy are tax-free.

Just starting to think about disability income insurance?

Before outlining disability income insurance coverage options and key terminology, consider the alternatives to this insurance in the event of a disability:

• Group Long-Term Disability (LTD) Insurance: Many corporations provide group long-term disability insurance to their middle- and upper-level executives, but in many cases these employer-provided benefits do not replace enough income for executives during prolonged illness or injury to maintain their standard of living. What’s more, long-term disability insurance does not always cover bonus income or retirement contributions and has a cap on monthly benefits. Highly paid personnel may only receive 30 percent to 50 percent of earnings if disabled.

• Social Security: Qualifying for Social Security benefits may be difficult. The amount of benefit received depends upon several variables including age, income and contribution status.

• Savings Withdrawals: Withdrawing money from your savings account is one way to pay for monthly expenses; however, a disability spanning 90 days or more could rapidly decrease savings and increase stress.

• Borrow: You could borrow money from a family member. How much is the individual willing to loan? How long can you continue to borrow? Without work, could you afford to pay your bills? For how long? If these questions make you uncomfortable, you are not alone. Many people protect their car and house but overlook their most significant financial asset – their ability to earn a living. Disability income insurance protection provides an important layer of security to your financial future.