Individual Disability

Disability Insurance provides a contractual obligation for the payment of funds in the event you are injured or become disabled and can no longer work at the your current profession.   The payments are usually tied to a percentage of your current income and are paid either weekly or monthly.  Although some employers provide some amount of base disability insurance, it is important to understand that there are crucial tax issues involved with who pays for the disability insurance.  If your employer pays for the coverage then the payments you received are taxable as income.  On the other hand if you pay the premiums then the payments are tax free,

For example, a person making $100,000 who becomes disabled and has a policy that will pay 60% of their income may be comfortable with $60,000 if it is tax free but will have difficulty getting by on say a $45,000 after tax amount.   For a few dollars more a month it is often advisable to have the employees pay this particular insurance premium and have the business increase support for some other employee benefit.