Disability insurance prevents injury or illness from becoming a major financial catastrophe.

After Erin Kerr, an elementary school teacher in the United States, dislocated her shoulder on a weekend mountain bike ride last April, she assumed she'd be back to work the following Monday. But a visit with her doctor confirmed otherwise.

Kerr's shoulder injury required surgery, and the preparation and recovery would keep her out of the classroom through the end of the school year.

Thankfully, the mother of two had signed up for a disability insurance. “I thought it would be a good idea a couple years ago - then I just kept renewing it," she says. That coverage ended up helping to pay for several thousand dollars in medical bills while she was out of work.

Disability insurance can help replace your income if you're unable to work due to a non-work related injury or illness. For various reasons, it's often overlooked - young people especially don't expect health problems will prevent them from working. Yet, regardless of your age, disability insurance can prevent an accident or ailment from becoming a financial catastrophe.

Determine what you need

Consider the fact that you have a 30 percent chance of suffering a disability over your career that keeps you out of work for more than 90 days. That could be a major hit to your income.

In Kerr's case, her banked sick leave paid for most of her time out of the classroom, but her disability coverage helped pay for the avalanche of medical bills that followed her injury. “I had a high-deductible insurance plan, so it was incredibly helpful," she says.

Kerr obtained her insurance via her employer. You can also purchase individual policies if your employer doesn't offer such a benefit or to supplement an employer-sponsored policy. If you are self-employed, disability insurance can be especially crucial in providing an income source in the event you can't work. Most experts recommend a policy that replaces 60 percent to 80 percent of your monthly income, though the right amount of coverage depends on your individual circumstances.

Kerr recovered from her accident, is back to teaching - and riding her bike. She now pays close attention to how much disability insurance she carries and plans on buying a bit more just in case. She notes that disability insurance offered her a financial cushion— and peace-of-mind— that lessened the blow of her unexpected mishap. “It took so much of the stress away," she says.