Disability insurance provides income if you cannot work due to an illness or accident. Short-term disability typically covers you for 13 to 26 weeks and will pay 40% to 70% of your salary during that period. It costs about 1% to 3% of your salary and may be paid for by your employer as a benefit. The premium depends on your age and occupation. Long-term disability insurance also costs about 1% to 3% of your salary, and these policies will begin payment after the period of short-term disability payments. Depending on the policy you select, the long-term disability payments can cover 20 years, 30 years or until retirement.
The Social Security system also pays disability payments under the SSDI program, and, if you qualify, you can collect this in addition to your private insurance. These SSDI payments range from $800 to $1,800 per month, depending on your earnings history, providing only a minimal safety net; it will not replace your income. Buy long-term disability insurance; it is not that expensive if you are part of an employer-sponsored plan, and it protects you and your family.