Your ability to earn a living is your most important asset. And one of the best ways to protect it is with disability insurance. Think of it as insurance for your paycheck. Disability insurance provides you with a percentage of your income if an illness or injury prevents you from working and earning a living. You don’t hesitate to insure your home, car and phone, so why wouldn’t you also protect what pays for all those things—your paycheck.

Disability insurance is something anyone who works and has earnings should consider. That’s because one in four people today will become disabled and potentially face financial hardship at some point during his or her working life. Disability insurance income helps cover expenses if you can’t work because of an illness or injury. There are disability insurance policies tailored to workers in specific professions as well as disability insurance for self-employed individuals.

There are two main types of disability insurance: short-term disability insurance and long-term disability insurance. Short-term disability insurance covers lost income for about three months while long-term disability insurance typically pays a portion of your lost income for anywhere from one year to your entire life.

• Short-term disability insurance replaces a percentage of your lost income for a brief amount of time—typically, between three to six months. Many short-term disability policies are automatically offered by employers as a benefit to their employees.

• Long-term disability insurance replaces a percentage of your lost income for an extended period of time. That amount of time, which is known as the benefit period, can last anywhere from about a year to until you reach retirement age. Long-term disability insurance usually replaces between 40% and 65% of your income. Like short-term disability insurance, this coverage may be automatically offered by your employer. You can also buy your own policy if your employer doesn’t offer coverage (or you’re self employed) or to supplement what your employer offers.

In general, the cost of a disability insurance policy becomes less expensive the longer the elimination period is. That’s one reason why many people pair a short-term disability insurance policy with a long-term disability insurance policy. A short-term disability policy lets you increase the elimination period of your long-term disability policy. This can save you money on premium payments and give you needed financial support while you wait for your long-term disability insurance to kick in.

Many people assume government-provided disability benefits will help them weather a tough time, but those benefits are usually not enough to maintain your quality of life. Likewise, employer-sponsored disability insurance is often not enough.

There is no one-size-fits-all answer for how much disability insurance a person needs. That’s because that number is dependent on many personal factors.

That said, an easy way to get a general idea of how much disability insurance you follow the three step calculation below:

1. Add up all your monthly living expenses.

Keep in mind that some expenses may go down if you can’t work. These can include expenses for commuting, a professional wardrobe and meals out. Important expenses to include in this total are:

• Rent or mortgage

• Groceries

• Health insurance and health care expenses

• Utilities

• Car expenses like auto payments, auto insurance, gas and car maintenance

• Food and groceries

• Childcare and/or education expenses

• Household maintenance like cleaning and upkeep

• Subscriptions and memberships

• Entertainment

• Travel and leisure expenses

• Clothing expenses

• Savings, investment and retirement contributions

• Debt payments for student loans, personal loans and credit card debt

• Charitable contributions

2. Add up how much income you can expect to continue receiving.

This includes income from any existing disability insurance policies. Also add in income from other sources like savings and investments.

3. Subtract the second figure from the first figure.

The difference is the amount of disability insurance you should consider purchasing.

Keep in mind that doing your own calculation or using a disability insurance calculator are only meant to give you a general idea of how much disability insurance income you would need if you became injured or ill. To get a more precise idea, it’s a good idea to give us a call or schedule a meeting so we can walk through and discover the right amount of coverage for you .

The cost of disability insurance depends on several factors. Just some include your benefit amount, benefit period, occupation, health status, age and terms of the policy. As a general rule of thumb, the disability insurance cost for a long term individual policy is 1% to 3% of your annual salary. As always, we would be love the opportunity to walk you through your different options and provide you with a free quote and consultation regarding disability insurance.

It’s always a good idea to review your disability insurance with a licensed insurance agent whenever you experience a life change. This can include accepting a new job, getting married, welcoming a baby, assuming new debt or receiving a substantial raise at your job. It’s also a good idea to review your disability insurance benefits once a year with an agent to make sure everything is in good shape. Weather you've purchased a policy through us before or you are just looking to have an insurance professional review you coverage, we would be happy to schedule an appoint with you.

To receive disability insurance benefits, you will have to meet the disability definition as it’s defined in your policy. Both long-term and short-term disability insurance have a waiting period before you can receive benefits after suffering an injury or illness. It’s known as the “elimination period” and you can think of it as a deductible measured in time instead of money. The elimination period can last anywhere from a few days for short-term disability insurance to two years for long-term disability insurance.

The process of filing a claim for disability insurance starts with submitting a claim packet. It typically includes a:

• Claimant statement that asks you personal information as well as details about the disability you suffered.

• Employer statement that asks your employer questions about the nature of your job, how your disability affects your ability to do your job and if you qualified for any other disability benefits.

• Physician’s statement from the doctor treating you for your disability. Your doctor will be asked about your disability, how long you’ve had it, treatments you’ve undergone and their thoughts on when (or if) you can return to work.

• Bank information form so you can receive your disability insurance payments via direct deposit.

It can take anywhere from a few weeks to a few months to hear back about your disability insurance claim. Common reasons for why disability insurance claims are rejected include:

• You didn’t meet the disability definition as spelled out in your policy.

• You misrepresented key information in your disability insurance application.

• The injury or illness is excluded in the disability insurance policy. (A common exclusion is for pre-existing conditions.)

• The illness or injury arose from an excluded cause such as drug use.

If your disability insurance claim is rejected, you may be able to file an appeal with the disability insurance company.