Choosing the Best Disability Insurance

Disability insurance, which is your very own safe haven that replaces a portion of your salary in the event you become injured or disabled and are unable to work, is an important commodity to have.

The last thing you want to do is find yourself in a sticky situation where you can’t work and are unable to make enough money to live and support your family. That’s why it’s important to invest in disability insurance and take time to choose which type of policy is best for you and your loved ones.

There’s a lot of controversy surrounding whether disability insurance is even a necessity. As added reassurance on why disability is important, keep this statistic in your back pocket: In 2011, a 20-something had a 30 percent chance of becoming disabled — anything from a back injury to being diagnosed with heart disease — before retiring, according to the Social Security Administration. And while some may argue that a construction worker has more of a chance of getting hurt on the job than, say, an office worker, the second most common cause for collecting disability is cancer, which may not have anything to do with your occupation.

Disability insurance, which is your very own safe haven that replaces a portion of your salary in the event you become injured or disabled and are unable to work, is an important commodity to have. Considering that information, ask yourself: Do I have enough money in savings to maintain my lifestyle if I were to become injured and weren’t able to work? How much of a hardship would it be on me and my loved ones if this misfortune were to occur? Would I have to cut back and compromise my standard of living or, worse, forfeit my possessions, such as my car or even my house? Keep in mind that the average long-term disability claim is 34.6 months. Would you be able to go that long (or even longer) without the income you are used to?

That said, choosing disability insurance can be difficult. First, it’s important to decide between the two kinds of disability insurance offered: short-term, which kicks in on the eighth day of your disability and lasts up to six months, and long-term, in which benefits begin after the first six months and typically pay until you’re 65. You may have access to an employer plan (although most don’t provide short-term insurance), or you may need to purchase private disability insurance. Policies can go up to about 70 percent of your annual income, and sometimes may even be tax-free if you’re paying the premium instead of your employer.

When choosing disability insurance, determine the amount of coverage you’ll need. While it should be enough to maintain your and your family’s current lifestyle, also keep in mind that if you were to become disabled, there may be costs that will no longer apply to your situation. Make sure to factor both of those notions into the equation when deciding on the coverage amount.

Next, figure out how long your policy will pay a benefit. For example, the ideal policy would entail benefits being paid until age 65, at which time retirement benefits should become accessible.

Last, you’ll want to consider whether you’ll choose a policy that allows you to select “own occupation” or “any occupation.” The first defines disabled as being unable to continue your job in your current profession, and the latter means you’ll need to be unable to perform any type of work in order for the policy to pay any benefits.

In your journey to find the right disability insurance, use the policies as a guide against your occupation, age and profile to get the offerings you need most.

“The good thing is that there are a lot of disability insurance companies,” says Jennifer Fitzgerald, co-founder of Policy Genius, a digital insurance broker offering several insurance products. “Independent brokers can navigate across these options and match them to your profile.”

We can help you fully consider your options and help you understand how they can impact your financial future. Contact us today.


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