Significance

• According to an MSN Money article titled "Disability Insurance Can Save Your Life," at least 12 percent of the adult population in the United States suffers a long-term disability every year. Furthermore, most people don't have substantial savings to cover their living expenses for an extended period of time if they suffer a disabling injury or illness. Adults who have significant assets often have them tied up in investments intended to finance their retirement years. In such cases, a disability insurance plan can be vital for replacing some of the income lost due to an injury or illness.
  
  

Considerations

• Social Security provides disability income to workers. Yet the income people receive depends upon their covered earnings, which is the amount they've paid in Social Security taxes throughout their employment. The U.S. Social Security Administration has strict guidelines workers must meet to qualify for disability benefits. Claims are often rejected the first time they're submitted, causing workers to engage in a lengthy appeal process or hire attorneys to pursue their disability claims. Income from a disability insurance policy can be important because Social Security claims can be delayed for long periods of time or rejected altogether.
  
  

Warning

• Workers-compensation plans provided by employers also have strict qualification guidelines that essentially leave some employees unprotected. For example, employees will be denied benefits under such plans if they can't prove they have a job-related disability. Workers who do manage to receive compensation will usually get payments that are significantly lower than their regular income.
  
  

Benefits

• Buying your own disability insurance will help protect you from receiving insufficient income through an employer's plan or Social Security. Private disability policies can replace as much as 70 percent of your regular income. It's best to shop around for a private policy because there can be big differences in issuers' terms. Furthermore, the disability income for which you qualify and the price of the policy will be affected by hazards associated with your job.
  
  

Features

• Try to get a private disability policy that will pay out if you can't perform your current job. Some insurers won't provide policyholders with disability income if they can perform significant work in another type of job. That means that as you are dealing with the actual physical disability, you also have to look for a new line of work. Choose a policy with the longest waiting period you can to reduce the cost. A policy that pays disability income six months after the onset of a disability will be cheaper than one that pays out sooner.