ANALYSIS: We often talk about the importance of life insurance, but some would suggest disability insurance that protects you financially against an accident or life-threatening disease is even more important.

An often quoted statistic highlights that a typical 30-year-old has a four times greater chance of becoming disabled than he does of dying before the age of 65. And it is estimated that one in six will be disabled for three months or more before the age of 50.

If you think about it, we likely all know someone who has been impacted in this way. Disability insurance can often be overlooked due to the "probability factor” — something isn't going to happen to me. But the reality is it could happen to you when you least expect it. Being off work due to a disability can have a huge impact on both your emotional and financial well-being.

There are basically two main options: long-term disability and critical illness. Both will pay for disabilities and illness, but how they pay is different. Disability insurance provides a monthly income if you're unable to work, while critical illness often pays you a lump sum that is tax free provided the illness is covered by your plan.

Regardless of which option you choose, you want to ensure you have enough coverage to meet your living expenses which would include mortgage payments, taxes, hydro, food and transportation. Knowing which coverage is right for you will be dictated by your salary, workplace coverage, family situation and lifestyle decisions.

A recent RBC Insurance survey shows that nearly half (48 per cent) of Canadian workers say they weren't financially prepared to be off work due to a disability and 78 per cent said that finances were tight. Emotional stress also took its toll with 81 per cent saying they were upset about not being able to work and 76 per cent said the situation was stressful for the whole family.

Just a few considerations:

• What’s your monthly benefit? You could have two thirds of income. Or 50 per cent of income. Or any number – it varies by policy. Insurance companies typically want a maximum coverage of two thirds of your gross employment income.

• Waiting period or elimination. This is the time period you have to wait to get benefits, after you’ve become disabled. A 90-day elimination period means benefits won’t start paying in until you’ve been disabled for 90 days.

• Duration of benefits. This is something many people miss completely. If you become disabled, how long are you going to receive benefits? It won't be forever and it isn't even likely until you retire. Typical options can be two, maybe five years. Or maybe even until age 65. Read the fine print.

• Cost of living option. This is a rider available on some policies. It increases your disability payments with roughly the inflation rate. If you’re disabled for a couple of years, this doesn’t matter. If you are disabled for an extended period of time then this rider becomes extremely important in maintaining the value of your benefits.

• Own occupation. Generally after two years of disability, the insurance company would like you to come back to work if not in your job maybe another one. Most of us want to know if we can’t do what we were doing before they became disabled, then they’re still disabled. Look into ‘own occupation rider’ that removes the two-year restriction on being disabled from your own occupation.

Even with coverage, missing work due to a disability can put enormous strain on your finances. The RBC survey said 29% dipped into savings for expenses; 17% took on more debt; 17% borrowed from friends and 9% cashed in their RRSP. Take the time to understand your coverage, fill the gaps and explore employee assistance programs. Failure to do so can make a really tough situation even worse.

As the Chief Financial Commentator for CTV News, Pattie Lovett-Reid gives viewers an informed opinion of the Canadian financial climate. Follow her on Twitter @PattieCTV