Disability insurance covers the risk of income loss from inability to work. This is especially important for those who are self-employed and others with no sick leave.

Maximum coverage is generally 60 to 70% of gross pay. Know what coverage you have through your employer. Try for coverage equal to 100% of your after-tax income to avoid reduction in lifestyle. Evaluate other income sources before deciding needed disability coverage. NOTE: If you pay the premiums, benefit payments are not taxed; if your employer pays the premiums, benefit payments are taxed.

Lack of disability insurance is a common financial error. Disability can be more financially devastating than death. Statistically, between ages 35 and 65, 30% of people suffer disability for five or more years.