In its simplest form, a disability is the inability to perform your job due to sickness or an injury. Some disabilities, like pregnancy or a sprained ankle, are for such a short period of time that it is more expensive to insure them than to lose the income. Other, longer-term disabilities, like recuperating from a heart attack or becoming paralyzed, may keep you from working for months, years or even the rest of your life. A long-term disability can have a huge impact on your financial situation because your income would drop or disappear while your expenses continue or even increase. The risk of long-term disability is well worth insuring.

One way is with disability income insurance, which provides benefits designed to replace your income after a serious sickness or injury. Disability income insurance programs include four main points:

1. Benefit amount: You can choose to replace a percentage of your current monthly income.

2. Elimination period: All disability income insurance policies have an "elimination period," similar to the deductible for medical and car insurance. This is the length of time you must be disabled before you would become eligible for benefits, typically 30, 90 or 180 days.

3. Benefit period: Once you qualify for disability insurance, the policy will pay you monthly benefits for a certain period of time. Based on your disability and your policy, monthly benefits may be payable for only one or two years, or until you reach age 65 or older.

4. Definition of disability: The policy has a "definition of disability" which defines disability relative to your ability to work and/or your ability to work in your current occupation. The definition of disability is one of the most critical features of a disability income policy, and is something you should review carefully before purchasing a policy.

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Receiving coverage through your employer provides some protection — but it probably isn't enough. Here's why:

• Most employers only provide coverage for a percentage of the employee's base salary, such as 60%, leaving you greatly underinsured if you get bonuses or commissions.
• Just because you're disabled doesn't mean life will get cheaper. In fact, additional medical expenses could make your disabled life more expensive.
• Disability benefits received through your employer may be taxable, reducing your income even further.

• Save on taxes: When you buy your own insurance with after-tax income, 100% of the benefits are income tax free.
• Cover your actual earnings: Cover a higher percentage of your income with insurance that covers bonus and/or commission income.
• Choose the disability definition: Many employer-sponsored disability insurance programs use a restrictive definition of disability. Your policy can be much less restrictive (and therefore, likely to provide benefits when you need them).
• It stays with you: When you change jobs, you won't have to worry if there is a gap before you are eligible for benefits with the new employer.