Disability insurance is insurance protection which protects your paycheck in the event of your disability from an illness or injury.  After a waiting period has been satisfied, a percentage of your paycheck or a fixed amount of money per month will be payable to you as long as you remain disabled.

Supplemental Disability Coverage
Many employees are covered by their employer’s group long-term disability insurance.  These plans protect 60% to 66 2/3% of income up to a maximum monthly benefit.  Unfortunately, as the employer pays the premium for this coverage, the monthly benefit is income taxable at claim time.  As a result, a disabled employees normally will take a 33% to 40% reduction in pay, or more. 

Supplemental disability insurance is additional disability insurance protection which is paid in addition to group insurance. The income is received tax free, as long as the premium is being paid by an individual.  By adding supplemental disability insurance to one’s group insurance, approximately 75% to 80% of after-tax income can be insured.