3 things to know before buying disability insurance

Buying insurance is a big life decision, so the best way to ensure that you're getting your money's worth is to educate yourself. Here are three helpful suggestions to consider.

• Some disability insurance is what's known as gainful occupation coverage. This kind of coverage means that if it's possible for you to work at any job you're qualified for — for example, as a fry cook at Burger King — no insurance dough for you. (The insurance company will probably tell you to start learning the finer points of the deep fryer)
• Instead, ask your insurance agent for either an "own occupation" policy or an "income replacement" policy
• Own occupation will pay out if you're prevented from doing the job you have — for instance, if a writer loses his ability to type, the insurance will pay the claim. He'll continue to get paid even if he changes to a career outside of the writing profession and goes back into the workforce
• An "income replacement" policy will continue to pay benefits to that writer, but will cut his benefits should he decide to go back into the workforce and pursue another career
• These two kinds of policies make a lot of sense considering that, if you're under age 50, you're 50 percent more likely to be disabled for a period of time than you are to die

• Disability insurance doesn't come cheap, so don't let the insurance companies talk you into making it even more expensive down the road. It's better to put a little more money into the policy up front and get what's known as a non-cancellable and guaranteed renewable policy
• This covers you in virtually any situation. Changing your profession from accountant to javelin catcher? They still can't cancel you, and must renew you
• The other two types of disability insurance — plain old "guaranteed renewable" and "conditionally renewable" — have major disadvantages
• The "guaranteed renewable" policy may be just that, but it gives the insurance company the flexibility to make changes to the policy
• "Conditionally renewable" means, well, don't expect to get renewed once the company finds out you're catching javelins for a living

• Even if you're only 35, signing up for this fast-growing segment of the insurance industry is a smart move. Why? Because your premiums will be very low, and as a result, you'll save money over time
• Long-term care insurance covers you in the event of disability or prolonged illness. The insurance can grant you all sorts of protection, such as covering nursing home costs and in-home health care
• The trick here, though, is that very few young people think that far enough in advance. By the time they are senior citizens, the monthly premiums can be too much to bear

Disability insurance is an important, and often confusing, purchase. Before you sign on the dotted line keep these three suggestions in mind.