Disability

In the event that you become disabled and are unable to work, the benefits provided by disability insurance can help replace a portion of your earned income.

The appropriate amount of disability coverage will depend on your particular situation. However, there are a few issues you may want to consider.

First, consider carrying enough coverage to replace at least 60 percent of your earnings. Many companies limit benefits to between 50 percent and 80 percent from all sources of disability income prior to the disability. This would mean, for example, that the amount of any Social Security disability payments you receive could be deducted from your benefit amount.

If you are concerned about the cost of a private disability insurance policy, consider extending the waiting period, which is the time between when the disability occurs and when you start receiving benefits. Choosing a 90-day or 180-day waiting period (instead of 30 days) may help lower your premium.

Be sure to compare and review policy benefits carefully. Disability insurance can be an affordable way to help protect your assets in the event of a disability.