Disability Insurance: The Basics

(MoneyWatch) 

Can I keep generating a paycheck if I get hurt?

The chance that you won't be able to work at some point in your career because of a medical problem is surprisingly high: nearly one in five Americans will be disabled for a year or more during his or her working years, according to the Life and Health Insurance Foundation for Education. That's why it's essential to have disability insurance, which replaces a portion of your income if you're laid up with health problems.

A policy from your employer will typically replace as much as 60 percent of your income; if your coverage isn't as generous, you may want to purchase a supplemental policy. And if you aren't covered at work at all, you should look into buying an individual policy to cover a long-term disability that could keep you out of work indefinitely. Bear in mind, though, that disability insurance is extremely tricky to buy and can be quite costly.

Follow these five links to bone up on disability insurance, calculate how much coverage you need, and start shopping for the right policy.

Editor's Pick

• Disability Insurance: The Big Picture

  Start with this overview of your risk of becoming disabled, what government coverage is available, and how private policies work.

• What Is Your Target?

  With this disability needs calculator, you can figure out how much coverage you should get, based on your living expenses and sources of income.

• Why It's Important to Have

  Learn more about why you need disability insurance through the stories of real people who've unexpectedly suffered a medical setback.

• How to Find the Right Plan

  Before you talk to an insurance agent, download this 12-page guide to shopping for coverage that includes a worksheet for comparing policies.

• Government Resources

  Find links here to your state insurance department's Web site, where you may be able to get a list of companies and agents that sell policies in your state. Plus, you can find links to ratings agencies so you can check on the health of potential insurers.