Disability Income Insurance

Disability income insurance is a type of coverage that replaces a portion of your income if you become unable to work due to illness or injury. It provides ongoing monthly payments designed to help you meet financial obligations such as rent, mortgage, utilities, or living expenses while you recover or adjust to a long-term disability.

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This type of insurance can be short-term, covering temporary disabilities for a few weeks or months, or long-term, continuing until you recover, reach a certain age, or the benefit period ends. The benefit amount is typically a percentage of your pre-disability earnings, often between 60 and 85 percent. Policies may also include features such as a waiting period (called the elimination period), cost-of-living adjustments, and partial disability benefits for those able to return to work part-time.

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Disability income insurance provides financial stability during health-related work interruptions and is an essential complement to life and critical illness insurance.

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Example:

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If your monthly income is $5,000 and your disability insurance covers 70 percent of earnings, you would receive $3,500 per month after the elimination period if you are unable to work due to a covered disability.

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What to Watch For:

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Understand how your policy defines “disability.” Some plans pay if you cannot perform your regular occupation, while others pay only if you cannot work in any occupation for which you are reasonably qualified. Review elimination period options carefully to balance premium cost and financial readiness. Confirm whether your benefits are taxable, as this depends on who pays the premiums.