Money Matters – Insurance Primer: Disability
BOSTON (CBS) – If you are single, you need disability insurance. Who will support you if you can no longer work? Could you move in with family? Would you want to? Families with children and a single worker need disability insurance. If you are a dual income couple, you both need disability insurance.
Between the ages of 25 and 55, you’re more than twice as likely to become disabled as die.
Life insurance protects your dependents if you should die. If you are unable to work it is disability insurance that will protect you and provide an income stream for you and your dependents.
Insurance companies will not normally insure a worker for more than 60% of their current income. The insurance companies want you to have some incentive to return to work after an injury. If they guaranteed you 100% of your income you may not ever want to return to work.
To purchase disability insurance look to your employer first for that’s where it will probably be the cheapest. If it is not being offered as a group benefit ask why. Sometimes all it takes is for the employees to ask. Because of the inherent abuses in the system fewer employers are offering disability insurance and it is becoming more expensive. If nothing is available then you may need to seek outside resources.
Check with your insurance agent and see what they can find for you. Check more than one source for prices can vary dramatically. A self-employed carpenter will find it hard to find disability insurance but he/she is the very person who may need it the most. So do your homework. I have compiled some websites that will be helpful: DisabilityQuotes.com, 4-Disability-Insurance-Quotes.com, and About-Disability-Insurance.com.
The chances of you experiencing a disability that will last three months or longer before you reach age 65 is around 50%. So if you don’t have disability insurance be sure you have an adequate emergency fund stashed away. If you are allowed to accumulate sick days and have accumulated 60 days or more you are probably covered adequately for a short-term disability. It is the long term disability that you need coverage for.
Social Security does provide disability benefits. But it is extremely difficult to qualify for Social Security disability benefits. You also may be eligible for workers compensation that is provided by your employer and pays a disability benefit if the disability is job related. Payments here are low also and don’t last very long for again they want you back to work as soon as possible.