A disability can strike anyone regardless of their age, gender or occupation. In this sense, anyone who earns an income could benefit from the added protection provided by disability insurance. Those looking to help protect their family and other loved ones from possible financial disruption associated with suddenly becoming unable to work due to illness or injury would be appropriate for this insurance.
Disability insurance is designed to replace a large portion of your gross income on a tax-free basis should a sickness or illness prevent you from working.
If you are unable to work due to an illness or injury and thus are unable to earn an income, you will receive a monthly payment after a pre-determined waiting period has passed. You might already have disability insurance through your employer, but you should be aware that this coverage may not meet all your needs. Individual disability insurance can provide you with more flexibility and can also help protect more of your earnings.
What is a total disability?
A total disability falls under two main categories:
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Any-occupation: You cannot perform the main duties of any job that you are reasonably qualified to do. A court reporter who loses a limb may not be able to type, but may be qualified to teach a class, for example.
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Own-occupation: You cannot perform the main duties of your job, regardless of the employer. A court reporter who loses a limb and is no longer able to type is an example of own-occupation total disability.
How much total disability coverage do I need?
Your monthly benefit amount should be about 60% of your pre-tax income, or roughly equal your take-home pay. You may be able to purchase more coverage as needed or add a rider to cover increases in the cost of living.