202,886 and counting… That’s the number of working-age Americans who have experienced a disabling illness or injury so far during the month May.

For of those of you who didn’t know, May was Disability Insurance Awareness Month — a campaign started by the Life and Health Insurance Foundation for Education to help people understand the importance of protecting your income from an unexpected disability due to illness or accident through a month-long awareness and education campaign. Hopefully, this campaign will encourage individuals and businesses to evaluate their own disability insurance needs, and take action to address provided they haven’t already done so.

WHAT IS DISABILITY INSURANCE?

Disability insurance generally comes in two forms: short-term and long-term. Short-term coverage will usually cover an absence for up to six months, while long-term will provide coverage for a much longer period of time. Long-term plans can be designed to provide benefits for a couple of years or all the way to retirement age. Properly structured policies will usually provide 50 – 60% of an   individuals earned income.  Most people think disability insurance is “too expensive” or “costs too much.” But, the fact is the average annual cost of a policy is one to three percent of an individuals earned income. The longer you wait to obtain coverage the more expensive the premiums will be. In addition, by putting off the decision to purchase disability insurance you run the risk of not being eligible for coverage or having a coverage rider excluding pre-existing conditions.

WHO NEEDS DISABILITY INSURANCE?

During your working years, you are more likely to face disability than death. Nearly one out of every three workers will suffer a disability lasting three months or more at some point during their career.

And disability isn’t a one-time event. The repercussions can continue for months — sometimes years — impacting the financial security of you and your family. If you can’t do your job, money isn’t coming in, and the bills start piling up.

It's generally recommended that disability coverage be chosen to replace 60 to 70 percent of your total taxable earnings. If you purchase disability insurance with after-tax dollars, your benefits will usually be income tax free. If you have group disability insurance provided by your employer, however, benefits will generally be taxable.

Small business owners have special concerns and should consider obtaining professional advice about policy options that protect a business if the owner becomes disabled.

Keep in mind that many policies and plans will not cover disabilities caused by suicide attempts, drug abuse, war, or attempts to commit a crime. Disabilities due to pre-existing conditions are also frequently excluded.

As the month a May wraps up, take a moment to consider your disability insurance needs, whether you have a policy or not. IF you do have a policy, ask yourself if anything has changed since it was purchased. Has your income increased? Have you changed occupations? If you haven’t purchased disability insurance consider evaluating a policy.