Disability insurance policies used to be “bundled” with a pre-set assortment of features but now they’re frequently “de-coupled.” That is, you can choose specific policy features that serve your needs.
A basic policy for a 45-year-old who wants individual coverage to supplement a group plan might be an income replacement policy that will pay benefits to age 65. Such a policy will pay benefits that are based on the level of income you actually lose because of being out of work, perhaps after a minimum loss of 20%.
For example, if you have a policy with a $4,000 monthly benefit and you lose half of your income because you’re unable to work, the policy would pay $2,000-half of your maximum benefit.
Cost-of-living adjustments and a future increase option probably should be included. The former will boost benefits to keep pace with inflation while the latter permits you to add benefits (by paying higher premiums) as your income rises, without taking a physical exam.
