Disability insurance will pay a portion of your income if you are unable to work for an extended period of time due to an injury or illness. There are two types of disability insurance: short-term disability insurance and long-term disability insurance. As the name implies, short-term disability insurance replaces much of your paycheck (up to 80%) for a short period of time—usually three to six months—and is often available through your employer as a free employment benefit or at low cost. And long-term disability insurance replaces some of your paycheck if you are unable to work for years or decades—sometimes until retirement. Long-term disability insurance is not often provided by employers—but you may purchase an individual policy. Because long-term disability insurance often does not pay enough to cover your expenses, some people purchase supplemental long-term disability insurance policies.

In South Dakota, disability insurance is regulated at both the state and federal levels. Short-term disability insurance typically covers a significant portion of an individual's income for a temporary period, often ranging from three to six months. This type of insurance is frequently offered by employers as a benefit, sometimes at no cost or for a low premium. Long-term disability insurance, on the other hand, provides income replacement for a more extended period, potentially lasting for years or until retirement age. Employers less commonly provide long-term disability insurance, but individuals can purchase private policies. Additionally, some individuals opt for supplemental long-term disability insurance to ensure they have adequate coverage to meet their expenses, as basic policies may not suffice. It's important to review the terms and conditions of any disability insurance policy to understand the coverage extent, including the duration of benefits, percentage of income replaced, and any exclusions or limitations.