Imagine how you would perform your job duties if you got in a major accident. In the best-case scenario, it’s likely you’d have difficulties doing routine tasks—even if you typically just sit at a computer all day. That’s why it’s important to consider purchasing disability insurance if your employer doesn’t offer it.
Disability insurance provides for a considerable portion of your income—usually somewhere between 50 percent and 70 percent—if you can’t work. Depending on your policy, there will be a cap for how much money you can receive per month and for how long you can continue to receive it. Short-term disability covers about three to six months out of work, while long-term disability insurance can provide coverage for several years.
If you don’t have a strong emergency fund set up, it can be worth considering getting short-term and long-term insurance because the latter usually requires a waiting period before the policy starts to pay out; short-term coverage can fill the gap. If you’re out of work for a year, for instance, you don’t want to have to wait until month three for your policy to kick in. When you compare your options, look for policies that are “noncancelable,” meaning your policy can’t be turned off by your insurer on a whim, and that are “guaranteed renewable,” meaning you can renew your policy each year without a new medical exam.
Whether short term or long term, you can expect to pay a premium of 1 percent to 3 percent of your income each year for disability insurance.