Disability Income Insurance

Why disability coverage matters

Most people insure their home and car without a second thought, yet the income that pays for both often goes unprotected. An illness, an injury, a surgery or a complicated pregnancy can keep you out of work for weeks, months or longer — while the mortgage, groceries and other bills keep arriving.

Disability income insurance pays you a monthly benefit, so you can focus on getting better instead of worrying about money. If you are self-employed, there is often no sick pay or employer plan to fall back on, which makes personal coverage even more important.

How it works

You choose a monthly benefit, usually a portion of your income, and an elimination period — the waiting time before benefits begin. If you become disabled as the policy defines it, benefits are paid for the benefit period you selected, which can range from a few months to many years, sometimes up to retirement age.

How a policy defines disability matters a great deal:

• Own-occupation policies pay if you cannot perform the main duties of your own job.
• Any-occupation policies pay only if you cannot work in any job suited to your education and experience.

Many policies also offer partial or residual benefits if you can work, but earn less because of your condition.

Types of coverage

• Short-term disability typically covers a few weeks to several months.
• Long-term disability can pay for years, protecting you against a serious illness or injury.
• Business overhead expense coverage helps owners keep paying rent, staff and other business costs during a disability.

In New Jersey, many workers are covered by the state’s Temporary Disability Insurance program, which pays short-term benefits for disabilities that are not work-related. Private coverage can add to those benefits and protect you for much longer.

Social Security also pays disability benefits, but its definition of disability is strict, approval can take months, and the benefits are meant to cover basic needs rather than replace your full paycheck. A private policy lets you decide how much protection your household needs.

How we help

We review any coverage you already have — through work, the state or an existing policy — and look at what your household would need if your paycheck stopped. Then we explain the options in plain English, compare policies from the insurance companies we represent, and help you through the application. If you ever need to file a claim, we will help you know what to expect.

Things to consider

• Apply while you are healthy. Your health history affects both approval and price.
• Read the definition of disability carefully — it shapes when benefits are paid.
• Match the elimination period to your savings. An emergency fund can let you choose a longer wait and a lower premium.
• Check whether benefits would be taxable, since that affects how much you would actually receive.