There are many different types of insurance coverage, beyond simple health insurance. One coverage that many Americans have questions about is disability insurance. Many employers offer disability insurance, but only 30 percent of workers have the coverage. This article provides details to help you better understand if disability insurance is right for you.

Understanding Disability Insurance

It can be financially devastating when one of the primary earners in a family is rendered unable to work for an extended period of time. Most Americans live paycheck to paycheck, and not having the expected income can put them into serious debt or even bankruptcy.

Disability insurance helps provide some financial stability during times of extended injury or illness. Short-term disability is financial assistance that begins shortly after the claim is made, but ends in two years or less. Long-term disability typically takes 90 days to begin, and then provides payments over a long period of time.

Disability insurance typically does not provide your entire salary when you are disabled, but only a portion of it. The type of payments provided and the amount you pay for the coverage are dependent on your employer’s plan, or a private plan you buy on your own, and a variety of factors regarding your health, age, and medical records.

It’s important to keep in mind that disability coverage is not health insurance, nor is it continuing to receive your salary after being injured on the job. It’s also not the same as Social Security Disability payments, which are very difficult to qualify for. It’s a separate insurance policy to help pay a portion of your wages for a specific time if you are injured or ill for a significant period of time.

Who Should Have Disability Insurance

Coverage in case of an injury or illness that keeps you from working is most important for those who are the primary earners in their families. Disability coverage can help you keep your bills paid in the event that you cannot work. If you are not the primary earner, or earn little compared to others in your household, paying for disability insurance may not make sense for you.

Another group of workers who should carefully consider buying disability insurance are entrepreneurs. Many times business owners would lose a substantial amount of money, not just in income, but in business investment, if they were disabled or ill. While this coverage will be more expensive if it’s not provided by an employer, it’s an important protection for the self-employed.

The easiest and cheapest way to get disability insurance is through your employer. You may choose to get an individual plan, however, if it is affordable. Individual plans have two important benefits over an employer plan: payouts are not taxable, and the plan follows you no matter what job you have.

The Social Security Administration estimates that 1 in 4 of today’s 20 year olds will be disabled before they are 67. However, only 30 percent of workers take advantage of their employer’s disability insurance plan. If you are the primary earner in your family, or you’re single or own your business, this coverage is important for you. Your financial future may depend on it.

Disability insurance is only one type of insurance coverage that helps protect Americans in case of a sudden life event. Understand what is required of you in case you have to change policies due to a life event. Read How to Update Coverage Purchased from the Marketplace.