It's every businessperson's worst nightmare: a serious accident or long-term illness that can lay you up for months, or even longer. Disability insurance, sometimes known as "income insurance," can guarantee a fixed amount of income--usually 60 percent of your average earned income--while you're receiving treatment or are recuperating and unable to work.
Spending scarce insurance dollars on disability insurance, though, can lend a false sense of security, according to Hanania. Disability insurance only pays recipients for one year, and they must prove a loss of profit in order to receive any money. "People are better off taking out term life insurance," Hanania says. (Term life insurance is the industry's least expensive form of coverage.) Nevertheless, IBA's disability-insurance benefits extend up to five years for any illness, and up to age 65 for victims of accidents.