What is Disability Insurance?

Commonly referred to as DI or Income Replacement, Disability Insurance is often an area overlooked when it comes to personal risk management. Often when asked what your most valuable asset is, people refer to their business, home, investment portfolio or other hard assets. While this may be somewhat true, your most important asset is your ability to earn an income.

How can it help?

Disability Insurance pays you a monthly benefit in the event that you become disabled and are unable to perform some or all of the substantial and important duties of your occupation. Definitions of disability vary widely so be sure that you review your contract and understand it before purchasing.


Elimination & Benefit Periods

Most DI plans will also have an Elimination Period and a Benefit Period. The elimination period is the number of days that you must be either totally or partially disabled as defined in the policy contract before you are entitled to any benefit payment. Typically this would be 30, 60, 90 or 120 days. The benefit period states how long your benefits will last. This can range from anywhere from 1 year right up to age 65. Some older DI plans also have lifetime benefits.

DI for Business

There are also business DI products such as Business Overhead Expense, Key Personal and Disability Buy-Sell. Many optional benefits such as return of premium, cost of living allowance and guaranteed insurability are also available and should be considered.



Income When You Need It

Income Replacement plans are an integral part of financial planning individually or for your business. A thorough review of your personal or business disability insurance needs should be made with a professional in the field so that he or she can tailor a plan that it right for you.