Disability insurance

Disability insurance
All property that you own, whether real or personal, was derived or depends on your ability to earn an income. Protecting that income is of paramount importance. Should you become seriously ill or injured and be unable to work, you’ll continue to have an income when you have disability insurance. It’s available as either short-term or long-term coverage.

Short-term coverage
You can begin collecting on short-term disability coverage after the required waiting period as stated in your policy. That’s usually not more than 14 days. The typical coverage amount would be a sum equal to 60 percent of your pre-disability base salary. If you received your short-term disability coverage through your place of employment, and your employer paid for it, you’ll be required pay taxes on any disability benefits you receive. If you paid for it independently, you need not pay taxes on your benefits. Some policies will pay short-term disability benefits for up to two years, but most terms are for three months, six months or a year.

Long-term coverage
Depending on policy conditions, you can generally begin receiving benefits on long-term disability coverage three to six months after you become disabled. The typical coverage amount would also be about 60 percent of your pre-disability base salary. Depending on the policy, benefits can be paid for two years, five years or up until you reach the age of 65. Premium payments are ordinarily waived if you’re disabled for a certain period of time. Long-term coverage is taxable under the same rules that apply on short-term benefits.

Don’t think you’re too young to need disability insurance. About one-third of all long-term disability recipients are under the age of 40. Don’t count on workers compensation benefits either. About 90 percent of all long-term disability claims are for illnesses as opposed to injuries. Both types of disability coverage might be offered by employers. Due to price, check with your employer before going out into the open market. If it’s offered, you won’t want to go without disability coverage.