If you are supporting yourself and/or a family, disability insurance is a crucial part of your financial planning. Disability insurance also called "income replacement insurance."

Disability insurance pays the insured person an income when that person is unable to work due to an accident or illness.

On the job, you may be covered for short-term disability due to illness, injury or family medical or maternity leave*, but there are only a few states where short-term disability insurance is guaranteed - California, Hawaii, New Jersey, New York and Rhode Island. However, the benefits available and the type of illnesses covered vary from state to state.

Long-term disability insurance usually kicks in after short-term disability coverage ends - typically after six months.

But what if you're not covered for a long-term disability? You might be eligible for Social Security disability benefits, or covered under workers compensation or a pension plan, however long-term disability insurance gives you added protection with income replacement in the event that you can no longer work for months, or even years. This translates to very valuable protection over the long haul.

Currently, the odds of suffering a long-term disability before retirement are 1 in 8. Due to the unpredictability of becoming disabled, many people consider purchasing a long-term disability insurance policy not only for their family's financial security, but also for their own peace of mind.

The definition of disability can vary depending on the policy you have. For example, some plans pay when you’re unable to engage in your own occupation, on the other hand other plans pay only when you’re unable to engage in any gainful employment for which you’re reasonably suited based on your training or experience. It is common for insurers to use an own-occupation definition for two years, three years or even longer, with an any-occupation definition thereafter. Most disability plans require that you not be gainfully employed while you’re collecting benefits. In addition, some policies will pay you a portion of your monthly benefit if you have lost a part of your income due to a disability. (This is referred to as a residual or loss of earnings benefit.) Certain policies include a rehabilitation benefit that pays some or all of the cost of occupational rehabilitation approved by the insurer. Keep in mind that many policies will not cover disabilities caused by suicide attempts, drug abuse, war, or attempts to commit a crime. Pre-existing conditions are also frequently excluded.

You will need written proof of your disability to file a claim. Your insurer usually requires a letter from your doctor documenting the details of your impairment as well as prognosis for recovery. Your insurer may also require that you be examined, (at their cost), by a physician of their choice.

Most long-term disability plans have a waiting period before benefits begin accumulating. The most common waiting period is 90 days. However, you usually can get as low as a 60-day waiting period, as well as 180-, 365- and 730-day waiting periods. The best method of determining the length of your waiting period is to ask yourself, "How long can I go without a paycheck?" As for premiums, the longer the waiting period the lower the premium. Premiums are generally waived during your disability.

When one is disabled they need to concentrate all their energy on getting better. Disability insurance allows you do that by alleviating any financial worries so you can focus on your health and your future.