Financial Focus: Are you protected from disability risk?

But to feel truly prepared for a disability that could threaten your financial situation, you may also need to consider disability insurance. If you work for a mid-size or large company, your employer may offer group coverage as an employee benefit. This coverage can be valuable, but it may not be sufficient. For one thing, many employer-sponsored disability policies won’t fully replace your lost income. Also, some group policies may make you wait longer than you’d like before your benefits kick in. And these policies aren’t always “portable,” either — if you leave your job, you might also be leaving behind your disability plan.

For these reasons, you may want to consider purchasing a long-term disability insurance policy. However, the features of these policies vary greatly, so you’ll want to be diligent in choosing the policy that’s right for you.

What are the key features to compare among policies? For openers, look at the type of policy — is it noncancelable or guaranteed renewable? With a noncancelable policy, the terms and premiums can’t be changed, but a guaranteed renewable policy can increase premiums.

Here are some other features to consider:

• Coverage amount – How much will you receive in benefits? You may be able

to replace up to 100% of your after-tax income.

• Waiting period – How much time must pass from the onset of your disability until you start receiving benefits?

• Benefit duration – How long will you receive benefits? To protect against a

long-term disability, you might want a policy that replaces income until your planned retirement age.

• Inflation coverage – How much will your benefits increase each year? Ideally, you’d like your benefits to keep pace with inflation and keep up with what you might receive from future salary increases or promotions.

• Definition of disability – If you choose an “Own Occupation” policy, you’ll receive benefits if you can’t work at the job you had when you became disabled. With an “Any Occupation” policy, you’ll receive benefits if you can’t work at any job based on your qualifications.

Clearly, there’s much to consider when choosing a disability policy. You might want to consult with a financial professional, who can help you pick a policy that fits within your overall financial strategy. But don’t wait too long — you may never need to use this protection, but you might like having it available.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor. Edward Jones. Member SIPC.