The two primary types are short-term disability and long-term disability insurance. Short-term disability typically provides income replacement for a limited period, often a few months, while long-term disability is designed to replace income for extended periods—sometimes years or until retirement—if you’re unable to work due to a qualifying condition.

Disability insurance is important for anyone who depends on their income to cover everyday expenses. If missing a paycheck would make it difficult to pay bills or maintain your lifestyle, this coverage can provide valuable financial protection. It’s especially important for individuals without significant savings or other income sources.

A disability generally includes an illness, injury, or medical condition that prevents you from performing your job. This can range from recovery after surgery or pregnancy to chronic conditions like back pain, mental health issues, or serious illnesses. What qualifies as a disability depends on the policy’s definition and whether it covers your own occupation or any occupation.

Whether disability insurance premiums are tax deductible depends on how the policy is purchased and who pays for it. In many cases, individually paid premiums are not tax deductible, but the benefits may be tax-free. Employer-paid premiums may result in taxable benefits. It’s always a good idea to consult a tax professional for guidance based on your situation.

Yes, self-employed individuals can purchase disability insurance, and in many cases, it’s especially important since there’s no employer-provided coverage. Individual policies can be tailored to your income, occupation, and budget. A broker can help you find options designed specifically for self-employed professionals and business owners.