A serious illness or injury can harm more than one’s health—it can impact an individual’s ability to work and pay living expenses. A disability also can disrupt one’s retirement planning. The risk of becoming disabled is quite high—45 percent for people between 35 and 65.
In the event of a serious illness or injury, the benefit from employer and government programs—such as sick leave, short-term disability and Social Security—may not be enough to meet all of one’s financial needs.
Disability income insurance provides critical income protection for working-age people who find themselves unable to work due to illness or injury for a prolonged period of time. It pays individuals a portion of earned income—typically 50 to 70 percent—until they are able to return to work. There are no restrictions on how the money can be spent.
Some policies also cover expenses related to rehabilitation, retraining and workspace modifications to help individuals return to work. According to the U.S. Bureau of Labor Statistics, at least 35 percent of workers are covered by disability income insurance. In 2007, life insurers paid $15.7 billion in disability income insurance benefits.