Disability Insurance
What Is Disability Insurance?
Disability insurance is a type of coverage that provides income replacement if you're unable to work due to a physical or mental illness or injury. It's designed to protect your ability to earn a living when a health condition prevents you from doing your job.
Why It's Important
Your income is one of your most valuable assets. If you were suddenly unable to work due to an accident, illness, or chronic condition, disability insurance helps ensure you can still cover essential living expenses.
Types of Disability Insurance
1. Short-Term Disability Insurance (STD)
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Coverage Length: Typically 3 to 6 months
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Waiting Period (Elimination Period): Usually are 0 to 14 days after disability begins
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Benefit Amount: Often 50% to 70% of your gross income
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Purpose: Covers temporary disabilities like surgeries, injuries, or maternity leave
2. Long-Term Disability Insurance (LTD)
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Coverage Length: Several years, up to age 65, or for life (depending on the policy)
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Waiting Period: Often 90 to 180 days
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Benefit Amount: Typically 40% to 60% of your gross income
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Purpose: Covers serious or permanent disabilities, such as cancer, severe injury, or mental illness
Cost of Disability Insurance
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Typically 1%–3% of your annual income for individual policies.
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Costs vary based on:
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Age
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Health
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Occupation
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Coverage amount
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Waiting and benefit periods
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