According to government statistics, the risk of an unexpected disability is higher than a premature death among working adults. In addition, the financial impact is potentially more devastating. Yet few people are adequately prepared for a disability.

Disability insurance replaces lost income when a person cannot work due to a disability. Benefits are paid monthly, and the amount paid is established as a percentage of a person’s income, which is usually 60%. However, the person can choose a lower amount. If a person has a partial disability, then the benefit will be adjusted proportionately.

Most people get disability insurance through work, since it’s the most economical alternative, and the eligibility rules are very favorable. However, group insurance has strict conditions with regards to the claims process, benefits may be limited for highly compensated employees and coverage is lost when a person switches jobs.

Highly compensated employees, small business owners and self-employed persons should consider an individual disability insurance policy. With these policies, the insured retains ownership and can choose benefits that are specifically suited for his or her situation.