Have you considered how you would make up for lost income if you’re in a serious accident or sick and can’t work for several months? Are you financially prepared to cover missing paychecks over many weeks or months?
That unexpected circumstance may never occur, but if you buy disability insurance now you can be financially prepared should the unthinkable happen. For hardworking Americans, disability insurance provides income assistance when unexpected circumstances hinder normal earning ability.
Short- and Long-Term Coverage
Many employers offer short-term and long-term disability insurance coverage. There are key differences between the two plans, and ideally, you should have both types of coverage from your employer.
Short-term disability provides a benefit for a short duration such as 13 weeks or 26 weeks; or even in months, six months, for example. The elimination period (the number of days you must be disabled before benefits begin) are on average either seven or 14 days, and the percentage of the income being replaced is on average 60 percent.
Consider purchasing this coverage, especially if your employer doesn’t offer sick days or a salary continuation plan as part of your compensation package. It’s important coverage to have after the birth of a child or when recovering from a short-term injury.
Longer-term coverage is just as critical, as rehabilitation or medical treatment may take months or years. In addition, some individuals never reach the point where they can capably return to work and must change occupations or are permanently unable to work.
Social Security Disability Insurance has high standards, which often results in many individuals having to turn elsewhere for financial support. Without disability insurance, these circumstances could significantly impact the financial well being of you and your family.
Determining the Right Amount of Disability Insurance
Ideally, you should purchase as much disability insurance as you need to replace lost income and adequately cover your monthly expenses. To determine how much you need, calculate all your sources of income and your ongoing expenses and purchase enough disability insurance to cover the gap between the two.
Disability insurance is generally affordable, especially when you consider the added debt you may incur by relying on credit cards to carry you through the difficult time.
What about skilled professionals?
Highly skilled workers shouldn’t discount the need for disability insurance. From manufacturing to service to C-Suite professionals, everyone needs income protection. No matter if you perform surgery, create code, run a business or clerk at a gas station, you depend on the income to provide for your family and build a future.
If an unexpected injury or illness prevents you from working at your standard capacity, your income earning ability and lifestyle could be impacted, making an already difficult situation even harder.
Comparison Shopping for a Plan
When shopping for disability insurance, compare factors such as elimination periods, the benefit replacement amount and duration of coverage. Be sure to evaluate the definition of disability as well.
According to David Polen, director of products for Colonial Life, “It could be for your ‘own occupation,’ which covers you if you’re disabled and can’t do your current job. Or it could be for ‘any job,’ which covers you only if you can’t work at all. The first one offers much greater protection, and it’s going to cost more.” Here are a few more factors to consider: A good long-term disability plan will kick in once short-term disability runs out, replace at least 60 percent of your earnings, provide coverage up to retirement age, and be yours to own no matter where you work.
Consider purchasing disability insurance today to help protect what matters to you. With the right type and amount of coverage in place, you can ease the financial strain a covered illness or injury can create so you can focus on what really matters: getting better and building your future.