Your ability to make a living is one of your most important assets. What happens if you’re injured and have to stop working for a period of time? Having disability insurance is one of the best ways to help make sure you have financial security.
How disability insurance works
If you suffer from an unexpected injury or illness that prevents you from working for an extended period of time, disability insurance can provide a critical source of income until you recover.
Traditionally, employers offered disability insurance to their employees automatically or as a voluntary benefit. But the employment landscape is changing and many people do not have an employer. What hasn’t changed is the need to have a disability policy in case you can’t work for a period of time, so you don’t have to dip into your savings.
What you need to know
Disability insurance works like any other insurance policy in that you pay regular premiums to guarantee that, when you need it most, you have the financial support you need to cover your expenses.
Premiums are generally equivalent to 1-3% of your annual income, and can pay out up to 60-80% of your income for the period in which you cannot work. The amount of time disability insurance will continue to pay out depends on the policy; most cover at least two years of disability, but more expensive policies can pay out for decades.