Disability income insurance

Key Points

  • Disability income insurance provides income if you experience a long-term illness or injury
  • Employer-sponsored policies often cover only a percentage of your current income
  • By paying for a policy with after-tax dollars, benefits received are income tax-free

Disability income insurance offers an extra layer of financial protection by replacing your income when you're not able to earn it due to a disabling injury or illness.

Why disability income insurance?

A sudden injury or illness could prevent you or your spouse from working. It could result in loss of income as well as additional expenses associated with the disability.

Employer-sponsored group disability insurance policies, Social Security disability benefits and personal savings may fall short of providing all of the income you depend upon.

An individual disability income policy can:

  • Replace a higher amount of your earned income
  • Cover bonus income
  • Provide benefits tax-free

Disability income planning with Ameriprise

If you pay your premiums with dollars that have already been taxed, any benefits paid to you will be income tax-free. Retaining your own coverage gives you more control.

Your Ameriprise financial advisor can help you determine the disability income insurance that's appropriate for you. Your financial advisor can help you choose the right coverage based on:

  • Benefit amount. The percentage of monthly income you replace.
  • Length of time before benefits start. Also called the elimination period; similar to a deductible for medical or auto insurance. You typically choose 30, 60, 90, or 180 days.
  • How long the benefit will last. You can set the terms for a length of time to receive your benefit anywhere from one to two years up until age 67.
  • Definition of disability. This can be the most important part of a policy. The types of injuries or illnesses that can make it impossible to do your job are often much different from the types of disabilities that make it difficult. One type of injury may be covered and the other may not, depending on your choices.

Take the next step

To determine the type and amount of disability income insurance that's right for you, talk to a financial advisor.

Ameriprise Financial can help you protect what's most important with our own RiverSource® disability income insurance or insurance offered through other providers.