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Insurance that replaces part of your income if illness or injury stops you working.
Why It Matters
Disability coverage is relevant to investing mainly through emergency-fund sizing. An emergency fund exists partly to cover a loss of income, so existing coverage changes how large that fund needs to be — someone with solid long-term coverage is protecting against a different-shaped risk than someone with none. Policies vary considerably in what counts as a disability, how long benefits last, and when they begin.
Key Points
- Replaces a portion of income if you cannot work.
- Existing coverage affects how large an emergency fund needs to be.
- Terms vary widely — waiting period, benefit duration, and the definition of disability.
Related Terms
Common Questions
Insurance that replaces part of your income if illness or injury stops you working. Disability coverage is relevant to investing mainly through emergency-fund sizing. An emergency fund exists partly to cover a loss of income, so existing coverage changes how large that fund needs to be — someone with solid long-term coverage is protecting against a different-shaped risk than someone with none.
Disability coverage is relevant to investing mainly through emergency-fund sizing. An emergency fund exists partly to cover a loss of income, so existing coverage changes how large that fund needs to be — someone with solid long-term coverage is protecting against a different-shaped risk than someone with none. Policies vary considerably in what counts as a disability, how long benefits last, and when they begin.
Replaces a portion of income if you cannot work.
Existing coverage affects how large an emergency fund needs to be.
Terms vary widely — waiting period, benefit duration, and the definition of disability.