The importance of disability insurance.

Disability insurance can replace a portion of your income when you are unable to work because of injury or illness. If your primary source of income suddenly came to an end, how would you pay your bills? How would you maintain your standard of living? The answer to these questions is obtain a good disability insurance policy. 

There are two major types of disability insurance coverage, short term and long term. 

Short term disability insurance provides an income for the early part of a disability. A policy may pay benefits for two weeks up to two years. It is often included as part of an employee benefits package. 

Long term disability insurance helps replace income for an extended period of time, usually ending after five years or when the disabled person turns 65. Some people have long term provided by their employers; others purchase it individually. 

There are also two major types of individual long term disability insurance: no cancelable and guaranteed renewable. With these types, the insurer cannot cancel or refuse to renew the policy as long as the required premiums are paid on time. 

The key difference between the two major types of long term disability insurance policies is that under a no cancelable contract, you have extra security that premiums can never be raised above those shown in the policy as long as the required premiums are paid. With a guaranteed renewable policy, the premiums can be raised, but only if the change affects an entire class of policyholders. For this reason, initial premiums for guaranteed renewable policies can be less expensive than no cancelable policies.