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DISABILITY INSURANCE
Disability income insurance provides the loss of income caused by a disability from either sickness or accident. This coverage is as important as life insurance but is very often overlooked by most people.
That’s because at any given age the odds of becoming disabled are much higher than dying. In fact, every year 12% of the adult U.S. population suffers a long-term | |
disability. One out of every seven workers will suffer a five year or longer period of disability before age 65, and if you’re 35 now, your chances of experiencing a three month or longer disability before you reach age 65 are 50%. If you’re 45, the figure is 44%.
Suffering a disability would be a catastrophic event for you and your family. It would create enormous emotional and financial pressures for the family because your role would change and you would have physical needs to be met. Any assets that you have would be in jeopardy.
Social security does provide a disability income benefit but it is very difficult to qualify for benefits. More than 80% of applicants are rejected the first time. Many who do end up receiving benefits must hire a lawyer and go through a lengthy appeals process.
There are four things to consider in deciding on a disability income policy. The first is the definition of disability, is it the inability to perform the duties of your own occupation or the inability to perform the duties of any job for which your education and training make you qualified. Then you have to decide on the amount of the monthly benefit, generally the most a company will cover is 60% of your gross monthly income. How long can you afford to be without an income before the benefit kicks in? This can range anywhere from 30 days to 6 months. The longer the waiting period, the lower the premium. How long would you like the benefit to continue, 2 years, 5 years or age 65?
In summary, you want to get the highest benefit for which you can qualify, get the longest waiting period you can afford and get coverage for the longest period possible.
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