Disability income insurance provides you with an income if injury or illness prevents you from working. You should not overlook this form of insurance.

Plan	Description
Employer	Many employers provide disability coverage at little or no cost to employees. Employer coverage may be limited. You may want to supplement this coverage with an individual plan. You will pay federal income tax on some or all of the benefits if your employer pays for the plan. Employer plans usually provide coverage for no more than two-thirds of your current income. For longer term disability, coverage is usually for no more than 50% of your current income.
Individual	You can purchase an individual disability insurance plan through an insurance company. If you are supplementing an employer plan, make sure you purchase an individual plan that provides payments at the same time you are receiving group plan payments. Benefits you receive are not subject to federal income tax if you and not your employer are paying the premiums. Individual plans usually provide coverage for no more than 70% of your current income.

About Premiums

Disability income insurance plan benefits affect premiums.

Length of coverage	Some plans provide coverage until retirement, some for life.
Guaranteed renewable	The insurance company cannot end your coverage although premiums can increase.
Noncancelable	The rates are guaranteed not to increase and the plan cannot be canceled as long as premiums are paid.
Extra features	Cost of living adjustments, automatic increase in benefits and guaranteed insurability may be available for higher premiums.
Occupation	If your job involves risk or travel to dangerous locations, you typically pay higher premiums.

To Lower Costs

Choose a longer waiting period before benefits begin. Save enough money to pay for your expenses when you are waiting for benefits to begin.
Choose a shorter benefit period. However, you must be able to financially provide for yourself if your disability continues beyond the stated benefit period.

Next: Long-Term Care Insurance

Updated Thursday, February 07, 2008

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