Explore disability insurance

According to the Council for Disability Awareness Links to an external site., more than 25 percent of 20-year-olds will be out of work for at least one year before they retire due to a disabling condition. Disability insurance protects you by providing a portion (usually 60 to 70 percent) of your income if you become disabled.

Even if you experience a serious medical condition, your bills and expenses will continue. With medical debt being a leading cause of bankruptcy, it pays to have disability insurance. Two types are common:

• Short-term disability insurance pays a portion of your income for a limited period after you have used any sick time. Pregnancies, skeletal injuries, digestive disorders, mental health and fractures or sprains are common reasons people use short-term disability policies.
• Long-term disability insurance pays after short-term coverage is exhausted and can last for a specified time or until you reach retirement. Long-term illnesses such as cancer may be covered by long-term disability.

Some employers will provide disability coverage as part of a benefits package. Taking advantage of this group coverage may save you money. If it is not available through an employer, you can purchase disability coverage on your own. To cut costs, select a longer elimination period (the time you have to wait between the start of an illness or injury and when benefits start) and offset this period with your emergency fund.

 

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