Have you ever thought about what would happen if you got injured so badly you couldn’t work? Well, if you rely on your income to live, it’s a scary thought.
Your ability to earn an income is one of your most valuable assets. You simply can’t live without money. So an unexpected accident could be devastating.
Preparing for a serious injury that puts you out of commission is smart. If you got in a car accident, for example, you’d want to consult an experienced auto accident lawyer to make sure you get the compensation you deserve from the other driver.
But not all accidents have someone to blame. That’s why it’s important to have disability insurance to protect your income as well.
In this article, we’ll go over exactly what disability insurance is and the top 5 reasons to get it.
What is disability insurance?
Disability insurance (aka disability income insurance) is insurance that protects you against injuries that leave you unable to work. It can supplement or replace the income you were making before the injury on a temporary or permanent basis.
There are three main types of disability insurance:
- Short-term disability insurance usually replaces 60% of your income for 3-6 months or until you return to work. It almost never covers your income for more than a year.
- Long-term disability insurance usually replaces 50-67% of your income all the way through retirement age (usually around 66 years old).
- Social security disability insurance is provided by the government. But it is hard to qualify for and the benefits are typically lower than private insurance policies and not enough to live on.
Of course, any type of disability insurance is better than none. And yet, 40% of full-time workers in the US (10 million Americans) have no disability insurance at all.
So if you don’t have good disability insurance already, here’s why you should get some or upgrade your existing policy:
- Your family depends on your income
If you are the breadwinner in your family, you want to make sure they’re taken care of if anything happens to you. A good disability insurance policy will protect them in the event that you get hurt and can no longer provide.
- Your employer offers limited disability insurance (or none at all)
Most employers offer only short-term disability insurance if they offer any at all. And the policy is contingent on you working for them. So if you get hurt and you lose your job, you’re out of luck.
Finding a reliable long-term disability insurance policy of your own will save you the stress of not getting enough insurance benefits to cover all your needs and trying to recover fast enough to get back to work after 3 to 6 months.
- You are self-employed
If you work for yourself, you won’t have any work benefits unless you pay for them yourself. And disability insurance should be at the top of that list.
You can choose from individual policies or find a group policy with others to bring down the cost of premiums.
- You are paying off debt
If you’re in debt, getting disability insurance will help you avoid getting behind on your payments. Think about your mortgage, auto loan, and credit cards. Debt like this can pile up fast when you’re not making any money to support yourself.
The average American is already $90,460 in debt. If that sounds like you, having disability insurance might help you sleep better at night.
- Social Security isn’t enough
Lastly, get a disability insurance policy so you don’t have to rely on disability benefits from social security. After all, they’re slow to arrive (in some cases, it can take up to a year to get paid), and they typically aren’t enough to cover your living expenses.
It’s better to find a comprehensive disability insurance plan on the private market to take care of you when you need it most.
Final tips
Now that you know what disability insurance is and why it’s important, you might wonder how to get it. Well, you’ll need to provide tax returns for the past 2 years or more as proof of income. Insurance companies will then look at your health history and job occupation before offering you a policy for anywhere from 1% to 4% of your annual income.
Shop around for a policy that offers the coverage you need at a price you are comfortable with. But remember, knowing you and your family’s income is safe from a debilitating injury is worth paying for.