Protect Your Future Income With Disability Insurance

Third, when choosing disability coverage, you'll want to pick a plan that covers you through age 65, that cannot be cancelled by the insurer, and that adjusts with the cost of living.

Fourth, if you plan to become self-employed or leave your job to raise your kids, look into getting your own non-cancellable disability coverage before you leave your job. You need to earn an income to be eligible to purchase coverage, but once you have your own non-cancellable coverage, you don't lose it if you quit your job.

What's Uncle Sam's Cut?

Here's one last tip: Find out how much of your pay your disability benefit would replace if you were disabled. If you have disability coverage through your employer, it's not unusual for the benefit to cover 66% or 2/3 of your pay.

Be aware that if your employer pays for the insurance for you, you'll have to pay tax on any disability benefits you receive, which will reduce how much you get even more. If this situation applies to you, it's a good idea to look into getting your own supplemental disability policy to replace the amount of your benefit you would have to fork over to Uncle Sam.

So here's wishing you good health and an income that's well protected.

Cha-ching! That's all for now, courtesy of Money Girl, your guide to a richer life.

As always, everyone's situation is different, so be sure to consult a tax or financial advisor before making important financial decisions. This podcast is for educational purposes only and is not intended to be a substitute for seeking personalized, professional advice.