Insurance Blog

Disability Insurance: A Significant Choice

Your income-earning potential is one of the most important assets you have, whether you realize it or not. If suddenly you could not work, how would your lifestyle suffer? Do you have enough money to continue living as you do now? Could you support yourself and your family? If so, how long could you continue to do so? These are all valid questions that should be considered by any adult who is in the workforce.  

The facts are startling. One of every seven employees will be disabled for five years or more, with 2.5 years being the average. This chart breaks down the causes of disability for individuals. These numbers are significant because the things that we typically insure against have much lower rates of incidence. The chance of your home being destroyed by fire is 1 in 1200 and the chance of completely wrecking your car is 5 in 1200. Disability is typically caused by very common things like illnesses such as heart disease and cancer. Because it is so common, it is important to consider disability insurance as a normal part of your financial plan.  

Governmental Disability Coverage  

There is state disability coverage that pays 55% of an individual's income for up to one year. However, that amount is typically insufficient and does not last long enough. Social Security is another option. However, only 39% of those who applied for it in 2008 qualified to receive it. With an average of $1004 per month paid out, it is also very inadequate. In addition, both these types of coverage can take months before payments actually begin to arrive.  

Individual Disability Coverage 

Individual disability insurance coverage is a much more realistic way of replacing your income if you become disabled. It is paid out in addition to governmental disability coverage and is not limited to a certain percentage of your income. You can insure yourself for as much as it takes to be able to pay your bills and relieve yourself and your family of the stress and worry that comes with illness or injury.  

Before you look to buying individual disability coverage, you will need to find out if you already have coverage through your employer. If so, take the time to review the policy so you know the terms and conditions of the policy, as well as how much it would provide for you if you were eligible for benefits. Often such plans have a time cap or a maximum amount payable, so it is important to understand the policy fully. Talk over your options with an experienced insurance agent.  

Know What You Are Getting 

It is equally important to understand the details of an individual disability insurance policy before taking one out. This is a relatively expensive insurance plan, as it is meant to replace your income and is more likely to pay out than many other types of insurance. Do not let yourself be tempted by policies that are much less expensive than other disability insurance policies as they often have limitations and restrictions that make it more difficult to get paid. You don't want to be stuck having to work in a field you are overqualified for just because you can no longer work in your chosen career but your insurance is too restrictive to pay you benefits.  
 
Next to health insurance, disability insurance is the most important type of insurance you can invest in. Check it out today.