Disability insurance can be complex and expensive -- and crucial
Barry Kaplan had a thriving dental practice in Atlanta when he started experiencing debilitating pain and began to drop instruments.
After a doctor confirmed he had ruptured disks in his neck, he went through surgery. When that failed to fully restore his motor skills, "it was time to hang up the mirror and drill."
"Not only was I making a nice living, I had just paid off my student loans and was about to pay off the practice note," says Kaplan, who went on disability at age 45. "This meant I was just about to enter the most profitable part of my career. My take-home pay was just about to jump once the loan was paid off, but it was not meant to be."
Fortunately, Kaplan, now 52, had disability insurance policies in force.
You don't have to be a medical professional to realize you need to insure against disability. Some 43 percent of Americans older than 40 will experience some health emergency that will take them out of the workforce for 90 days or more, according to the Insurance Information Institute.
Although most employers may provide disability insurance, coverage varies and may not allow you to make retirement fund contributions. Like most forms of insurance, disability policies can get complicated and expensive.
The typical employer-provided policy covers as much as 60 percent of salary to age 65. If you buy an individual plan, it could replace as much as 70 percent of annual income.
Only a handful of policies will provide enough for you to replace retirement-plan savings. So-called retirement protection programs will also cover 401(k) contributions. If you're facing a long-term disability of several years, this will help bolster your finances after age 65.
In a worst-case scenario -- you can't obtain employment due to an injury or condition for a year or more -- Social Security will provide modest disability benefits, though it's extremely difficult to qualify for them.
The key questions to ask your employer are: Do you have disability coverage, and how much does it cover?
The most common policies provide income for as long as six months, and are typically provided by employers. Long-term disability plans may kick in after that period and last until age 65 or provide lifetime benefits.
Switching jobs? You will also need to ask your new employer what kind of coverage it offers. If the company doesn't have any, you will need to buy a policy.
Insurance is basically priced according to the level of coverage requested and deductibles, also called waiting or elimination periods. In disability-policy parlance, the longer you wait to receive benefits by the insurer, the lower the premium, and vice versa. For example, if you choose a waiting period of a few weeks, you'd pay much more than if you waited a few months. How long you select depends on your savings. If you can afford to wait 90 days, make sure you have the resources to cover basic bills for that period.
These policies can get extremely confusing. Some of the most expensive policies are "own occupation," meaning they will pay benefits if you can't return to your original line of work. There are several variations, so understand the fine print before you pay the first premium.
More restrictive plans pay if you can't work in any occupation. Many insurers will limit benefits to a few years or reduce coverage if you can take part-time work.
It's also useful to have a cost-of-living adjustment built into your policy so that you keep pace with inflation.
In addition to wading through some murky policy language, you will need to know about the taxation of benefits.
The rules are simple: If you are receiving coverage through an employer as a tax-free fringe benefit, your income from a policy will be taxable. Paying for the policy with after-tax dollars will make the benefits tax-free. Ask your employer if you can finance your coverage this way.
For those who are self-employed, it works the same way, though individual policies tend to be twice as expensive as group plans. And women are charged higher premiums than men. Research shows they may be more apt to develop a disability.
John F. Wasik is a Bloomberg News columnist. He can be reached at jwasik@bloomberg.net. 
