Disability is a risk that many people underestimate. While most people have life insurance, health insurance and property/casualty insurance, many people fail to carry adequate disability insurance. Some people believe that the risk of becoming disabled is so small that they can afford to ignore it. Others believe that they will get enough through Social Security, if they become disabled. If you believe either of these to be true, you might want to reconsider.

A U.S. worker, under the age of 65, has a considerably higher risk of being fully disabled for over six months than she does of dying. Why is it that many more workers have life insurance than have disability insurance? Can you financially afford the consequences if disability occurs?

Perhaps you are planning to rely on Social Security if you become disabled. The Social Security administration states that “you can receive disability benefits after six months if you have a physical or mental impairment that’s expected to prevent you from doing substantial work for a year or more or result in death.”

However, virtually no one begins collecting Social Security benefits before they have been disabled for at least one year. Combining the long “lead time” to begin collecting Social Security benefits, with the relatively low monthly payments is a recipe for financial disaster. Just as you are not planning on receiving 100% of your retirement benefits from Social Security, you should not depend on Social Security alone to take care of you if you become disabled.

If your employer does not provide you with long term disability coverage, you should seriously consider buying a personal disability policy. If you pay for the policy, the disability income will be tax free. Combining the tax free disability payments with Social Security payments will allow you to buy a policy that covers less than your current total income.

There are many decisions to make with a disability policy such as a “noncancelable” policy in which payments never rise versus a “guaranteed renewable” policy where the insurer may increase premiums over time. Before buying any disability insurance policy, find a trustworthy insurance agent who will explain the costs and benefits of all of the policy options. Choose the policy with the coverage amount, benefit period and policy options that meets your current financial