Your most valuable asset isn’t your house, car or retirement account. It’s the ability to make a living. Disability insurance pays a portion of your income if you can’t work for an extended period because of an illness or injury. Everybody who relies on a paycheck should have this coverage.
Often we do not stop to think what would happen if our health failed or we are disabled by an accident. We think it could not happen to us, but true stories prove otherwise. What would we do if we could not go to work tomorrow, or the next day, month or even year? How would we pay our bills? How would we feed our family? Most likely, after spending our retirement savings, we would be broke.
Young people with their whole future before them also need to consider Disability Insurance. When we are young, we do not think these things could happen to us. But statistics show more than one in four 20-year-olds will experience a disability for 90 days or more before they reach age 67. Common injuries and illnesses such as back injuries, cancer, heart attacks, diabetes and other illnesses lead to most disability claims. Can we afford these losses?
Many employers offer disability insurance as part of their benefits package. Some employers pay all or part of the insurance premium. Be sure to take advantage of any plan they offer. Also, be sure to know the plan. When does the insurance go into effect, how much does it pay, how long is the waiting period before benefits would begin upon experiencing a disability? The waiting period is important to know because most policies do not begin to pay out until you have been declared disabled for 90 – 120 days. You will need to be sure that you have enough savings to cover those days yourself even if you have a good disability plan. You also need to consider if the coverage is enough. Do you need a supplemental policy? Some employers offer disability insurance but do not pay for it. You will need to weigh the cost. This type of policy is usually less expensive because it is still part of a group plan and costs less than an individual policy.
If your employer does not offer a disability policy or does not offer enough coverage, you will want to check into an individual policy to cover this potential loss of income. Also, you may be self-employed and need to purchase your own disability insurance. An individual policy will allow you to keep your coverage when you change jobs and allow you to customize your policy with the features that mean the most to you. Individual policies also allow you to collect benefits tax-free if you become disabled. If your employer pays for the coverage of your policy, you must pay taxes on the benefits.
Factors that will affect the cost of an individual disability policy are:
- Your age and health
- Your gender
- Whether you smoke
- Your occupation
- Length of waiting period
- Your income
- Length of benefits
- Extra features such as cost-of-living adjustments
Disability Insurance is definitely a coverage that you do not want to be without during your working years. It is insurance that protects your paycheck. Here at B&H Wealth Strategies we can help with disability insurance or your other insurance needs. Contact us today and put our knowledge and experience to work for you. There is no cost for an initial meeting where we can get to know more about you and discuss next steps to evaluating your insurance needs. Click here to schedule a meeting or call (423) 247-1152 to request more information.