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When a person becomes disabled and unable to work, at some point their income will stop. It might be sooner or later, but unfortunately, life goes on and daily living expenses continue to mount.
Disability income insurance is available to continue at least a portion of ones income while unable to work. It’s sad, but most people give more attention to life insurance than they do about income replacement should they become disabled.
Disability income insurance is available individually or sometimes as a portion of a group benefit provided by an employer in their group package.
Individual policies are most often sold to self-employed and professional people. The amount of the benefit relates to earnings and is matched as close to after tax income as possible. Generally it is up to 60% of monthly net income and there is usually a cap on the amount.
When included as part of a employee group benefit package, disability income policies are usually more liberal than individual plans as far as limitations and exclusions. It is also much easier to acquire coverage. As a general rule, group plans are much less costly to all parties.
Disability income protection should be an element of your entire financial planning. The importance cannot be overestimated because it relates to your overall family finances. Whatever you situation may be, disability is one of the most important factors when you consider you inability to work and produce income.
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