Broker Check

Disability Income Protection

Common Disability Insurance Questions

Why is disability insurance important?

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 (DI) provides you with a percentage of your income if an illness or injury prevents you from working and earning a living. Most people don’t hesitate to insure their home and car (primarily because they don’t much choice). That being said, why wouldn’t you also protect what pays for all those things—your paycheck.

Do I need Disability Insurance if I work?

Disability insurance is something anyone who works and has earnings should consider. That is 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 cannot work because of an illness or injury. There are DI policies tailored to workers in specific professions as well as DI for self-employed individuals.

What are the types of Disability Insurance?

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

How much Disability Insurance do I need?

You can calculate how much DI you need by adding up your monthly expenses. Then add up how much DI you already have as well as any personal savings you could draw on if you were not able to work. If that number is less than your monthly expenses, consider buying more disability insurance.

How do I get Disability Insurance?

The main ways to get DI are: through your employer, through a professional organization, or on your own. Buying DI through an insurance company, is generally the most flexible and reliable way to get coverage. A licensed insurance agent can get you a DI quote. You may also be eligible for government disability benefits as well.  However, it is not likely to be enough to replace your lost income.

How much does Disability Insurance cost?

The cost of DI depends on several factors. Such as your benefit amount, benefit period, occupation, health status, age and terms of the policy. As a general rule of thumb, the DI cost for a long-term individual policy is 1% to 3% of your annual salary.

How should I manage my Disability Insurance policy?

You should review your DI with a licensed insurance agent or financial advisor 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 DI benefits once a year with your agent to make sure everything is in good shape.

How do I receive Disability Insurance benefits?

You can file a claim to receive disability benefits through your employer’s human resources department if your policy is through work or through your licensed insurance agent if you bought the policy on your own. To receive DI benefits, you will have to meet the disability definition as it is defined in your policy. There may also be a DI elimination period, which is a waiting period that can last anywhere from a few weeks to a few months before you can receive benefits.

Your Costs

As shown in the previous panel, you can use the calculator on this website to determine your Disability Insurance needs.

Obtaining Disability Insurance falls under Financial Advising (unless it is part of our Retirement Planning services)

Our rates for Financial Advising are $180/hr and are capped at 4 hours ($720) for Disability Insurance planning.

Disability Insurance planning, like all of our services, are customized (no “cookie-cutter” planning here).  Some individuals have simple and straightforward situations.  Others have complex circumstances that will take more time to create a solution.  That is why we charge hourly rates.  However, we also have caps, so that the maximum charges are not open-ended.