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Deciding whether or not to get disability insurance is not always straightforward. Depending on your circumstances it could be a savvy investment or an unnecessary expense.

To help you decide, here is an overview of what this type of insurance offers and which people stand to benefit most from it.

The basics

Disability insurance allows you to make a claim in the event that you become disabled in a way that prevents you from earning an income.

Most people who get this kind of cover are the main breadwinners in the household, since they recognize that if they were rendered unable to work due to an accident or illness, their family would need a backup plan in place.

The cover options

The variety of disability insurance you choose will depend on what is available in your region, as well as what level of protection you require as an individual.

For example, in places like Australia you can get total and permanent disability insurance (TPD) which goes above and beyond the more limited eligibility criteria of packages designed for temporary conditions.

It pays to learn about TPD insurance, since the more you know about the options available worldwide, the better equipped you will be when weighing up cover in your area.

The exceptions

While disability insurance might give you a financial safety net in certain scenarios, there are always exceptions to consider, so looking at how a disability is defined under the terms of a policy is important.

For example, while some packages will cover you against disabilities that arise from pre-existing medical conditions, most will not. Likewise there may be exclusions for people who have occupation-related disabilities, or for specific disabilities which do not prevent you from doing your job.

As you might expect, reading the small print of any policy is the best way to find out whether or not you will be receiving the cover you require. And if you are uncertain, working with an insurance broker to talk you through your options and find the ideal package is wise.

The compensation

This is another factor which will vary depending on the policy you pick, but on average you can anticipate that disability insurance will pay out between 60 and 80 percent of your original salary if you need to make a claim.

The amount of compensation has to be considered alongside the period over which it is payable. Cover for temporary disabilities will typically have a limited span, while protection against permanent conditions may pay out until your retirement, or for the rest of your life.

The costs

All insurance comes at a price, and disability cover is no different. The premium you will pay for protecting your income from disruption is contingent on many things, such as your age, your medical history, your lifestyle choices, the job you do and the amount of money you earn right now.

If you are young, relatively healthy and in a role with a modest salary, then your cover should be inexpensive. If you are older, have had health issues in the past, are a heavy drinker or smoker, or are in a high-flying position, expect to pay more for disability insurance.

Finally, remember that not everyone needs this type of insurance. If you are not in work, or you have some other means of supporting yourself, then it makes little to no sense to get disability insurance.

Likewise if you already have some cover of this kind provided by your employer, there is no point paying for it twice.

So do your research, consider your own situation and ask for recommendations from experts to reach the right conclusion.

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