Most people acknowledge the need for life and health insurance. We don’t think twice about insuring our home and vehicles. But far too many do not insure one of the most important things of all—their income. Disability insurance typically pays about two-thirds of a worker’s income in the event of an accident or serious illness that prevents the person from returning to work. Most often this income is tax-free.
Having disability insurance gives your family a chance to keep some level of normalcy even if one of the breadwinners is unable to work. Many people believe that they will be covered by some form of workers’ compensation, but this only kicks in if the injury happens on the job. However, about 60 percent of disabilities happen off the job.
What keeps people from getting disability insurance? Well, financial experts believe that most people think this type of situation won’t happen to them. They don’t want to pay out money to protect against something they don’t think will happen. About 82 percent of people either have no long-term disability or are underinsured. But up to 30 percent of people will experience a disability event that leaves them unable to work for 90 days or more.
So, how much disability insurance do you need? First understand that there are two types of disability insurance—short- and long-term. Short-term insurance kicks in within days of a disabling illness or injury and lasts for up to six months. Then long-term insurance would begin. You may not need short-term insurance if you have adequate savings to get your through the first six months of no income. Since disability insurance only covers part of your salary, you may need to increase the amount of coverage you have to meet all of your expenses.
Check with your employer to see if they offer this type of insurance, as purchasing it through your job is usually cheaper than purchasing it on the open market. If your employer does not offer this type of insurance, it wouldn’t hurt to ask if it could be added as a benefit. Even if employees pay the whole premium, buying it as a group is cheaper than purchasing individually.
If your employer does not offer coverage or you want to supplement your coverage, the best place to start looking for a policy is with your insurance agent or financial advisor. Pay attention to the details, as some policies have limits on payouts, waiting periods for coverage to begin, or potential delays in payouts once a claim is made. It may also seem expensive to purchase, so compare plans to make sure your money is providing as much coverage as possible.
It’s not unfair for us to say that life will never be better than when you’re living at Canterbury House Apartments in Houma, Louisiana! To further improve your day-to-day routine, we bring you these lifestyle-enhancing tips that will help you revamp your lifestyle in a variety of ways.