Disability insurance is a type of insurance which guarantees to pay you an income if you become disabled and unable to work. Some employers may offer disability coverage as a job benefit, but if not, you may need to purchase your own policy. If you are wondering “Why carry disability insurance,” here are a few points to consider:
1. It Offers Protection to You and Your Loved Ones
If you become disabled and unable to work, this can have devastating consequences to you and your family, especially if they rely on you for financial support. You will still need to pay your bills, including your rent or mortgage. Disability insurance can ensure that you can still pay the bills if you are unable to work, as most policies are designed to replace up to 66% of your income if you become disabled.
2. Short Waiting Period
Disability coverage normally kicks in after a certain waiting period; however, you have the flexibility to decide how long that waiting period will be. You can opt to start receiving benefits within 30 days, or, if you have plenty of sick leave and an adequate emergency fund, you may be able to handle a longer waiting period, which can lower your insurance premium.
3. Residual Benefits
Some disability insurance policies have residual benefits, such as allowing you to work part-time while still collecting benefits. This could be a good option for those who are unable to work their previous full-time hours but can handle working part-time, which allows them to stay active while earning a bit of side-income to supplement their disability benefits. Some policies will not pay out anything unless the policyholder is totally unable to work, so this is something you need to check into.
4. Reducing Your Premiums
Many people avoid carrying disability insurance for fear that it will be too expensive. However, there are many ways that you can reduce the premium on your policy. If you are still young, consider buying an annual renewable disability policy, which is similar to term life insurance, which can be converted to a permanent policy when you are older.
You can also try to get group coverage if you belong to a business organization or trade association. If you’re female, it is a good idea to choose an insurer that offers unisex pricing since women generally pay higher premiums than men.
Finally, look for and take advantage of any available discounts that are offered.
Since disability insurance plans can vary greatly, it’s a good idea to discuss your options with a qualified insurance agent to assess your needs. You should never buy a policy from someone who is not legally qualified to sell them. Ask the agent about the different types of “rider” options that can be included in your policy.
If you find that your disability claim gets denied, make sure to contact a disability denial lawyer, as well.
For more information on choosing a disability insurance policy, visit Consumer Reports “Smart Strategies for Disability Insurance” at their website, https://www.consumerreports.org/money/smart-strategies-for-selecting-long-term-disability-insurance/, or Investopedia “Choosing the Best Disability Insurance” at https://www.investopedia.com/articles/pf/06/disabilityinsurance.asp.