Disability insurance covers your earned income in the event of a disability that prevents you from doing your job. If you are no longer able to earn an income, but still have spending needs, then you can end up being a burden on your loved ones. The loss of an income can be financially devastating if not properly planned for; having a safety net can make a lot of sense, particularly for families with a sole breadwinner.

     Typically, all employed people should consider this type of insurance. Because its main purpose is to replace income lost due to a disability, it’s good for self-employed individuals, households with a nonworking spouse, and people without an employer sponsored policy. Disability insurance is usually structured to replace 60%-70% of monthly income. You can choose the length of your elimination period (the period between injury and receipt of benefit payments); although 90 days is the most common length, you should choose an elimination period that aligns with your emergency savings.