No one wants to consider becoming disabled, but what would you do if a catastrophic injury or illness prevented you from working? Disability insurance typically has a waiting period (often about 90 days) and can pay a portion of your income if you cannot work. As you consider buying this coverage, remember seven important things.
Seven important things to remember
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Assess your risk
Your occupation, hobbies, family health history and current health are all factors that affect your risk for developing a disabling injury or illness. Honestly and accurately assess your risk as you decide if disability insurance is a wise investment for you.
If you don't know your risk, ask your insurance agent to check industry classifications (for example, the Standard Industry Code) to determine whether your occupation is considered higher risk.
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Calculate your average income
The disability insurance you're eligible for depends on your annual net income. If your income fluctuates, average your income from the last three years and use that figure to calculate the amount of coverage you need.
Consider different policy types and product options such as Personal Disability Insurance when deciding what fits your situation.
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Perform a needs-analysis
A needs-analysis reviews expenses like your mortgage, debt, savings and retirement accounts and determines how much income you need if you become disabled. With that figure, you can make sure you buy a policy with adequate coverage.
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Apply when you're healthy
Most disability insurance carriers review medical records and may require a physical and blood tests. If you wait to buy a policy after an injury or a serious diagnosis, you may be denied coverage or face exclusions.
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Consider stacking
If you purchased disability insurance years ago, your benefit amount was based on your income at that time. Consider purchasing an additional policy to stack on top of your existing coverage and cover any income increases since the original policy was issued.
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Shop around
Insurance companies offer a variety of products at varying costs. Shop around to find the policy that meets your needs.
Verify each carrier's definition of disability and learn how it applies to your occupation and situation.
Ask whether a family history of a condition (for example, cancer) affects eligibility or pricing.
Don't rely on price alone—compare benefits, exclusions, riders and other policy features.
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Drop the policy when you turn 65
Many individual disability policies include an age-based definition that treats policyholders as retired at a specified age, commonly around 65; benefits for new claims after that age may be limited or excluded. Review your policy terms so you know how age affects coverage and whether you need other protections.
Disability insurance is a valuable asset. Use these seven tips, consider options like Disability Income Insurance, and talk to your insurance agent as you decide if it's right for you.
Frequently Asked Questions
When do disability benefits typically begin?
Most individual policies have an elimination period (waiting period) before benefits start, commonly 30 to 90 days; check your policy for the exact period.
How much of my income will disability insurance replace?
Policies often replace a portion of income—commonly up to 50–60%—but the exact percentage and any maximum benefit depend on the policy terms.
Should I rely on employer-provided coverage or buy a private policy?
Employer plans can be a good baseline but may be limited; a private policy can supplement employer coverage and follow you if you change jobs.
What is "stacking" and when does it make sense?
Stacking means buying additional individual policies to increase total benefit limits; it can make sense if your income has grown since you bought your original policy or if employer coverage is insufficient.