The Nest

Monday, October 22, 2007 10:35 AM

What is disbaility insurance? Do we need it?

Disability Income Insurance can replace income in the event of a partial or total disability.  If you have income to replace then you have a need for this type of coverage.  Individual Disability Income insurance provides a monthly benefit for a specified amount of time with after-tax premiums based on after tax premium payments.  It can either provide a full benefit or a partial or residual benefit for a partial or residual benefit.

Individual coverage can be relatively expensive and difficult to qualify for, especially in certain states such as California.   Premiums will depend on your health, occupation and other factors.  The amount of coverage available will be based on your income whether you are an employee or self-employed.

Even if you have group Long Term Disability coverage, this benefit may be significantly less than your current income, so a supplemental individual disability income insurance policy may be a consideration.

Social Security does provide disability income however it is based on a total, permanent disability and is difficult to qualify for.  The benefit is also low compared to the average annual income.

Tony Steuer, CLU is a specially licensed life insurance analyst and author of Questions and Answers on Life Insurance

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