A long-term disability policy is activated, replacing a portion of your lost income, when you are unable to work for an extended period. Employers cover approximately 40% of all workers with some form of company-paid disability insurance. If you buy it on your own, you may have to pay up to 40 cents per $100 of monthly coverage.

If you're buying, you should generally try to get a noncancelable policy with benefits for life, or at least to age 65, and as much salary coverage as you can afford. Insurers will generally cover up to 65% of your salary.

Generally, you should have total coverage equal to two-thirds of your current pre-tax income.
If your company provides disability insurance, check to see whether it's enough for your needs. Group disability insurance policies may be capped at six months and provide benefits that won't cover your expenses.

Back To Life Insurance | Back to Key Points