What would happen if you were permanently injured or became too ill to work?

You might qualify for disability payments from Social Security, but would you be able to survive on the average payout of $1,171 per month? Maybe you have some savings, but would it be adequate to cover your living expenses until you’re old enough to collect retirement benefits?

If you answered “no” to either of these questions, you should consider buying disability insurance.

Disabilities are surprisingly common: One in three women and one in four men will have a disability that keeps them out of work for 90 days or more at some point during their working lifetime, according to The Life and Health Insurance Foundation for Education.

Disability insurance basically protects your income, which is especially important during your peak earning years between 40 and 55 years of age. Not only do most people earn their highest salary during this time, they actively use it to pay down debt and save for retirement.

As most insurers won’t offer disability policies to individuals over the age of 59, now is likely your best time to buy one that will carry you through to full retirement age.

As with health and life insurance, the older you are, the more expensive disability insurance becomes. If you have health problems, it may even become difficult to secure – if at all. You may still be able to purchase a policy, but it may include exclusions for health issues such as back problems or ailments related to high blood pressure for which you’ve regularly sought treatment.

Before you pursue an individual disability insurance policy, check with your employer about group policies. If the company you work for offers one, you may be able to obtain coverage without submitting to a medical examination. This can make the process easier and save you money.

If your employer does not offer supplemental disability insurance, we can work with you to find an insurance company that offers guaranteed renewable policies with fixed costs and terms.

In general, experts recommend a disability insurance policy that will replace 60 to 70% of your salary.

Two types of coverage

• Short-term disability insurance. A short-term policy typically is designed to replace 80% or more of your gross income for a short duration of time, like 60 to 180 days.
• Long-term disability insurance. These policies typically kick in after you’ve been out of work for an extended period of time, such as 180 days. Long-term policies typically cover only about 60% of your salary. The coverage can last for years and even through the rest of your life, depending on the design of the policy.

How it works

The car accident. Bob suffered extensive injuries in a car accident and was unable to return to work for three years. Typically, after six months, long-term disability insurance would begin to replace a portion of his income. Once he returns to work, the disability coverage will end.

Long term disability. Elizabeth was diagnosed with Parkinson’s disease, and as she deteriorated she was unable to work. Her insurance will continue to pay a portion of her salary for a set amount of time, typically until age 65 or through the end of her life, depending on the policy.