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Ask Dave

Disability Insurance Coverage?

Dave explains what disability insurance covers and the difference between short-term and long-term disability.

QUESTION: A listener asks what disability insurance covers.

ANSWER: Disability insurance replaces your income when you are unable to work due to an injury or medical condition.

If you become completely disabled and you will never be able to earn an income, you will receive your lost income for many years – for life, until age 65, or for some other extended time frame.  If you have short-term disability insurance and become totally disabled, you will only receive your income for about three years.

Just remember that long-term disability usually doesn’t kick in until after the elimination period.  There may be a 3-4 month period where you don’t receive any income.  Be prepared for that with your fully funded emergency fund. 

Disability is very important and gets overlooked too often.  Statistics show that if you’re 30 years old, you’re more likely to become disabled than to die before the age of 60.