Disability Income Insurance

Overview

Read ACLI's Disability Income Insurance: Financial Protection for You and Your Family brochure, available in both English and Spanish.

Prolonged unemployment due to illness or injury can jeopardize a person’s lifestyle and long-term savings. According to the Social Security Administration, almost 1 in 4 of today’s 20 year-olds will become disabled before reaching age 67. Disability income insurance provides workers with paycheck protection. It provides cash to cover expenses such as mortgage payments, rent, or utilities. It also can pay for training or other assistance needed to return to work.

As with other major financial purchases, it is important to review all of the options available to you and to learn how disability income insurance works. You may already be covered under a group disability income insurance policy through your employer or eligible for disability benefits through work, the government, or other programs. Or you may have additional sources of income to depend on should disability strike: a spouse’s salary; short-term emergency savings; investments; or help from your family.

If the total of these is not enough to pay your living expenses on a long-term basis, or a disability would eat away at your retirement savings or children’s college fund, a long-term disability income insurance policy may be right for you. Such coverage may be purchased as an individual policy or available under a plan offered through your employer. Learn about the different types of coverage available.

Public Policy

ACLI supports expanding the disability income marketplace to enhance workers’ financial security and protect savings for retirement. We support measures that encourage disabled workers to attain maximum functionality and return to the workplace.

Types, Features & Tax Treatment

Types of Coverage: There are several types of disability income insurance policies available to protect the paychecks of today's workers. [Read more]

Filing a Claim: Insurers rely on information from a variety of sources to determine if a claim meets the policy's definition of disability. [Read more]

Costs and Fees: The cost of a disability income insurance policy varies depending on the features you select. [Read more]

Tax Treatment: Benefits may not be subject to income tax depending on who pays the premiums. [Read more]

Consumer Protections: Companies issuing disability income insurance policies are regulated by state insurance departments to protect consumers. [Read more

Buying Tips: If you're considering a disability income insurance policy, read this tips before you buy. [Read more]

Publications & Resources

Disability Income Insurance: Financial Protection for You and Your Family. This guide outlines the features and costs of individual disability income insurance and offers tips and a checklist on buying the right policy for you. (2014)

Private Long-Term Disability Income Insurance. This fact sheet explains how private long-term disability income insurance offers paycheck protection and complements the safety net provided by the Social Security Disability Income program. (2010)

Protection for the Unexpected. A serious illness or injury can harm more than your health--it can have an impact on your ability to work and meet your family's living expenses. This article explains how disability income insurance can help you avoid depleting your savings.