Category: Insurance

Do I really need disability insurance?

May 5, 2017
Leg in a cast

If you’re young, healthy and can work is disability insurance necessary to have? The answer is ‘Yes!’ According to the Council on Disability Awareness, over 37 million Americans are classified as disabled. More than half of those disabled Americans are in their working years, between the ages of 18 and 64. If you’re unable to work, disability insurance can provide income to pay bills and provide for your family.

What qualifies as disabled? 

Disabled in this instance means you’ve sustained an injury or medical condition preventing you from performing your job. For example, you may be sidelined by an injury from an accident or a chronic disease like multiple sclerosis. Even complications during a high-risk pregnancy requiring bed rest would qualify.

Disability insurance types 

There are two kinds of disability insurance to consider: long-term and short-term.

Short-term disability insurance can help if you have an illness or injury severe enough to keep you out of work beyond your accrued sick or vacation time. Short-term policies are not intended to cover your income loss for a prolonged period. Typically, these plans replace your income anywhere from 13 weeks to two years. Some policies may require a short waiting period which can last up to four weeks before kicking in once you’ve filed for coverage.

Long-term disability insurance can provide benefits to you for many years. That’s why it’s especially important for young people to consider getting this type of coverage. If you are severely injured when you’re 35, for example, and unable to work for the rest of your life, that’s a long time to go without a source of income to sustain you. The waiting period on a long-term policy is anywhere from one to 30 months, on average. The benefit duration is often about 60 months.

Depending on your situation, you may want to get both types or just one.

Replacing your income 

Disability insurance only replaces a percentage of your income — potentially up to 60 percent. Some policies will pay if you cannot perform the duties of your current job, which is called “own occupation.” Other policies will pay only if you cannot perform the duties of any available job.

Not only is a portion of your income replaced, disability insurance could also help protect your finances. Without this type of insurance, you put yourself at risk of quickly draining your emergency fund and any other savings you’ve accumulated.

Where to get coverage 

The most affordable way to get coverage is through your employer. Talk to your human resources representative about your options and have the premiums automatically deducted from your paycheck.

If your employer doesn’t offer it, your insurance agent may be able to provide a policy. Policies vary from company to company, so review them carefully. Ask these questions when doing your research:

  • What does this insurance company define as disability?
  • How are the benefits paid out?
  • Is the premium price they’re quoting competitive with others?

Don’t let the cost scare you. You may be able to reduce your premiums by extending the elimination or waiting period before you start receiving monthly benefits. The longer you delay taking benefits (90 days instead of 60), the lower your premiums may be.

Disability insurance can benefit every working adult, regardless of age. Be sure to talk to your employer or your insurance agent about coverage.

The advice provided is for informational purposes only. Contact your insurance representative for additional guidance. 

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