Your house, your car and your savings are not your most valuable asset.  Your ability to make a living is.  If you don’t have disability insurance and you become unable to work for an extended period of time you could lose everything.  Disability insurance pays a portion of your income if you become ill or have an accident.

Individual Disability

Several companies offer individual disability coverage.  Many of these companies are fairly restrictive about the professions that they will accept.  For example, coverage may be offered to dentists and doctors but not offered to roofers and construction workers.  Be aware that some offerings are “own occupation” (meaning that if you can’t work in your profession you are considered fully disabled).  The other definition is simple disability meaning that if you can do any work you are not disabled.

Employer Based Disability

Many employers shift the disability risk to private insurers.  This would fall into employer sponsored group disability category.  Employers may cover the cost entirely or a portion of the cost and offer it on a voluntary basis.  Typically, these plans are intended to cover about 60% of the earnings.  Employers usually offer long-term and short-term disability plans.  Most plans cannot be taken with you when you break service.

Word of Caution – Only five states offer disability coverage.  California, New Jersey, New York, Rhode Island and Hawaii.  If a disability occurs in a state without disability coverage the only option is Social Security.  Typically, Social Security provides a small benefit and it is difficult to obtain.