More than one in four of today’s young people become disabled even before they retire. And yet, despite these sobering statistics, a large majority of people have no disability insurance coverage.
Whether you’re self-employed or have group coverage through your employer, there are a number of reasons why you should consider investing in a disability coverage insurance policy.
The basics to know
At some point in our lives, most of us will experience an illness or injury that prevents us from working. Whether it’s a broken bone, cancer, or something else, an extended absence from work can have a major financial impact on your life. That’s where disability insurance comes in.
Disability insurance is a type of insurance that provides income replacement if you are unable to work due to an illness or injury.
There are two main types of disability insurance: short-term and long-term. Short-term plans pay a percentage of your salary for a period of time, usually three to six months. Long-term disability insurance pays a percentage of your salary for an extended period of time, usually until you reach retirement age.
What is Disability Insurance?
Disability insurance is a type of insurance that provides income replacement in the event that you become unable to work due to an injury or illness.
There are two main types of policies: short-term and long-term. Short-term policies provide coverage for a period of time ranging from a few months to two years, while long-term policies can provide coverage for up to age 67.
How Does it Work?
If you become disabled and are unable to work, disability insurance will provide you with monthly benefit payments to help cover your living expenses. The amount of the benefit payment is typically between 40 and 60 percent of your pre-disability income.
In order to receive benefits, you must first meet the policy’s definition of “disabled,” which is typically the inability to perform the duties of your own occupation.
Why Do You Need It?
There are a number of reasons why you should consider buying a disability insurance policy, even if you already have health insurance coverage.
- First and foremost, health insurance only covers medical expenses—it does not replace your lost income if you are unable to work.
- Additionally, most workplace disability policies only cover a portion of your salary, leaving you with a significant financial shortfall if you suffer a prolonged disability.
- Individual disability insurance policies can fill this gap by providing you with much-needed financial security in the event that you can’t work.
A disabling illness or injury can happen to anyone at any time, yet most Americans are woefully underprepared for the financial ramifications of such an event.
If you’re not already covered by workplace disability insurance, consider buying an individual policy to protect yourself and your family in the event that you can’t work.