Almost nothing impacts your lifestyle and well-being as significantly as your income.

Your ability to earn a paycheck isn’t just a means to autonomy and independence—it’s also a necessity for funding everything from basic living supplies to treasured hobbies. But what happens when your health suddenly limits your ability to perform your job functions?

Enter disability insurance, an optional type of coverage that may help you continue earning a paycheck and sustain your lifestyle after an accident or injury. Check out some of the basics of these insurance plans to discover how they may benefit you and your loved ones.

What is disability insurance?

Like most insurance plans, disability coverage intends to protect you against the unexpected. It provides a source of replacement income if you are rendered unable to work due to a legitimate injury or illness. If you’re a policyholder who becomes disabled, you’d simply file a claim to request benefits from your insurer while recovering; if it’s approved, your insurer would then pay to replace a portion of your former income (usually between 50 and 70 percent). You can use these benefits however you’d like, including paying for living expenses, paying down debt, and more.

There are two basic types of disability insurance: short-term and long-term plans. As their names suggest, these policies vary based on how long they will replace your income. Short-term benefits typically range from a few months to a year, while long-term ones may provide funds to those suffering from severe disabilities for multiple years.

But these benefits don’t last forever. Unlike a retirement plan or life insurance policy, disability insurance is neither intended to replace your entire income past age sixty-five nor help support your loved ones after you pass. Rather, it means to provide a temporary solution when you’re unable to earn a paycheck, supporting your financial needs until you can eventually return to work.

Where do you obtain coverage?

There are various ways to enroll in disability insurance. You can choose to join your employer’s group disability plan, if they offer such a benefit. These plans often provide coverage at a low cost. However, they may carry certain limitations, such as being tied to your employment at the company—this means you cannot file a claim for income replacement if you change careers. Also, these benefits may be limited to short-term coverage, and claimed payments may be taxable as income.

You can also choose to enroll in individual coverage at any time from a private insurance company. Many people choose to do so with the help of an insurance agent or broker, who can help them find appropriate coverage for their budget and health risks at a good price. Even if you receive coverage from an employer-based plan, you can still choose to supplement your policy with a private individual one for additional layers of benefits, such as long-term coverage or a greater percentage of income replacement. Payments are generally tax-exempt when purchased from an individual policy.

If you are sixty-five years old or above, though, you may choose to obtain disability benefits from the Supplemental Security Income (SSI) government program. You can also apply for Social Security Disability Insurance (SSDI) from the US government if you have sufficient work history and meet other requirements. Various other federal programs can also help replace your income if you’re unable to work for a myriad of reasons, including Worker’s Compensation. Each of these is directed toward specific individuals based on their age, work history, veteran status, where the injury took place, the severity of the disability, the projected recovery time, and more.

Because of their rigorous qualifications, SSDI plans are not for everyone. For one, these plans may only cover basic necessities and could be unsuitable for supporting your lifestyle. Also, waiting to enroll in SSDI or another government plan until after you become disabled, meanwhile, offers less assurance that you’ll actually be able to replace your paycheck.

Purchasing disability coverage through a private insurer, alternatively, may mean obtaining greater financial benefits in the event of an illness or injury. The requirements for payout are also more lenient with such plans, meaning that if you are sick or injured as a private disability policyholder, you may be more likely to receive benefits.

How do you select the correct plan?

Unlike federal programs, private insurers charge their policyholders monthly premiums. These prices vary based on the quality of coverage obtained and whether it is short- or long-term. But the average disability insurance plan costs only about 2 percent of an enrollee’s annual salary, making this a low-risk safety net that you could someday depend on.

Choosing an appropriate plan is essential to securing the benefits you’ll need in the event of the unexpected.  When you enroll in individual disability insurance, you will need to vary multiple terms of your policy. These include:

• The benefit period: whether you select short- or long-term coverage (naturally, long-term coverage will be pricier)
• Qualifying disabilities: how strict or lenient a policy is for covering illnesses or injuries
• Income replacement levels: the percentage of your income, including commission and other earnings, that the policy replaces
• The elimination period: the time gap between developing a qualifying disability and receiving income replacement
• Additional coverage areas: other contingencies, such as survivor benefits to your loved ones if you pass away during the benefit period

These various terms, limitations, and benefits can seriously affect your ability to replace your income after developing a disability. So to learn more about designing a plan that suits you, speak with an insurance agent or broker. They can help you understand all of your options and which coverage levels may be most appropriate for your needs. Once you select sufficient protection, you can feel more confident in your ability to continue supporting your lifestyle and family, even if your health changes suddenly.