Disability insurance is perhaps the most important type of insurance that one should buy. For most of us, our ability to work and earn an income is our most valuable asset. Unfortunately, disability insurance is often the last form of insurance that people purchase. Unlike life insurance, if you are disabled and you are under insured, you’ll be lying around helplessly watching your world crumble down around you.

Personal disability insurance can generally be purchased up to 60% of one’s earned income. Some coordinate with social security and some do not. Most long term disability products will have a waiting period such as 90 days before benefits are paid. The benefit payment period could range from 2 years up to age 65 or perhaps even age 70 if still working after age 65. Most policies insuring professionals will have an “Own Occ” definition for disability. This means that if after the elimination period you can’t perform the duties of your occupation, you are eligible for benefits. Thus, a surgeon that injured his hand to where he could no longer perform surgery would be eligible for benefits even if he could make money as a teacher. The definition for disability for many blue collar jobs may provide the “Own Occ” definition for the first 2 years and then change it to read if you can’t perform the duties of any job that you are trained, experienced or educated for.

The older one is, the higher the premium. The premium for women is generally higher because they are more likely to become disabled. Also the type of job will make a difference as to the premium.


Many professional will purchase Business Overhead Disability Insurance to provide money for salaries, rent, taxes, utilities & sometimes a replacement for the injured professional. Compared to other disability policies, this coverage is not very expensive. The premium that is paid by the business is tax deductible. These policies generally have a shorter elimination period and a 1-2 year benefit period.

Most businesses that have joint owners will purchase some type of life insurance to fund a buy/sell agreement. They should also consider purchasing a buy/sell disability policy that would allow the healthy owners to buy out the disabled owner.

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