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Disability Income Insurance
Protect your most valuable asset: your ability to earn. Disability income insurance replaces your salary when you cannot work due to illness or injury.
Why Disability Income Insurance Matters
Your ability to earn an income is your greatest financial asset. If you earn $6,000/month over a 30-year career, that's over $2 million in lifetime earnings. What happens if illness or injury stops you from working?
The Risk is Real
1 in 4 workers will experience a disability lasting more than 90 days before retirement. Many think it won't happen to them, but accidents, chronic illness, and mental health conditions can strike anyone at any age.
Common Causes of Disability
How Disability Income Insurance Works
DII pays you a monthly income (typically 50-75% of your salary) when you're unable to work due to disability. It acts as a salary replacement until you recover or reach retirement age.
Disability Occurs
Illness or injury prevents you from working
Waiting Period
You wait out the deferment period (typically 30-90 days)
Claim Submission
Submit medical evidence of your disability
Monthly Payments
Receive monthly income until recovery or benefit period ends
Key Terms to Know
- Deferment Period: Waiting time before benefits start (30, 60, 90, or 180 days)
- Benefit Period: How long benefits are paid (2 years, 5 years, to age 65, or lifetime)
- Own Occupation: Disability defined as unable to do your specific job
- Any Occupation: Disability defined as unable to do any job you're suited for
Types of Disability Coverage
Short-Term Disability
- • Benefit period: 3 months to 2 years
- • Shorter deferment: 7-14 days
- • For temporary disabilities
- • Lower premiums
Long-Term Disability
- • Benefit period: 5 years to age 65+
- • Longer deferment: 90-180 days
- • For serious, lasting disabilities
- • Higher protection value
Definition of Disability
Own Occupation (Best)
You're considered disabled if you cannot perform your specific job duties. You could work in another capacity but still receive benefits.
Modified Own Occupation
Disabled if you cannot do your own job AND are not working in any other occupation. If you take a lower-paying job, benefits may reduce.
Any Occupation (Strictest)
Only disabled if you cannot work in ANY job you're reasonably suited for. Hardest to qualify for benefits.
How Much Coverage Do You Need?
Insurers typically allow coverage of 50-75% of your income. This is intentional, as it maintains incentive to return to work while covering essential expenses.
Coverage Calculation Example
Factors Affecting Your Needs
- Dependents: More family members relying on you = higher coverage
- Fixed Obligations: Mortgage, car loans, children's education
- Emergency Fund: Larger fund = can accept longer deferment period
- Spouse Income: Dual-income households may need less coverage
Key Features to Look For
Guaranteed Renewable
Policy cannot be cancelled as long as you pay premiums. Look for this to ensure continuous coverage.
Non-Cancellable
Premiums are fixed for the life of the policy. More expensive but provides certainty.
Cost of Living Adjustment (COLA)
Benefits increase with inflation while you're claiming. Protects purchasing power during long disability.
Future Increase Option
Right to increase coverage as income grows, without medical underwriting. Important for young professionals.
Partial/Residual Disability
Benefits for returning to work at reduced capacity or income. Supports gradual recovery.
DII vs Critical Illness Insurance
Both protect against health-related financial impact, but they work differently. Ideally, you should have both.
| Feature | Disability Income | Critical Illness |
|---|---|---|
| Payout Type | Monthly income | Lump sum |
| Trigger | Unable to work | Diagnosed with listed illness |
| Covers | Any disabling condition | Specific listed conditions |
| Duration | Until recovery or benefit period ends | One-time payment |
| Best For | Income replacement | Treatment costs, lifestyle changes |
Frequently Asked Questions
Is DII worth the cost?
For most working adults, absolutely. The cost of DII (1-3% of income) is minor compared to the risk of losing 100% of income. It's especially important if you're the sole breadwinner.
Does my employer provide disability coverage?
Some employers offer basic coverage, but it's often limited (e.g., 60-day sick leave). Personal DII provides more comprehensive, portable protection that stays with you when you change jobs.
What if I'm self-employed?
DII is even more critical for self-employed individuals. You don't have employer sick leave or benefits. Your entire income stops when you can't work.
Are DII payouts taxable?
In Singapore, if you pay the premiums personally (not employer-paid), the benefits are generally not taxable. Consult a tax advisor for your specific situation.
Protect Your Income Today
Don't wait until it's too late. Get disability income protection tailored to your career and lifestyle. Our certified advisors will help you find the right coverage.