Disability Insurance May Save Your Life!

If you ask most people what their most important asset is, they will tell you it’s their home. In fact, everyone’s most important asset is their ability to earn money.

by Leslie Ellis

Leslie Ellis

Consider This…

If you were unable to work, how long could you support yourself (and your family if you have one)? One in seven workers will become disabled for five or more years. The average disability lasts for 2 ½ years. One in seven might not seem like much until you learn that the likelihood of your home burning down is 1 in 1200 and totaling your car in an accident is 5 in 1200.

Many people think that disabilities are typically caused by freak accidents. In fact, the majority of long-term absences are actually due to illnesses, such as cancer and heart disease.

How Much Disability Coverage Do You Have?

State disability will pay 55% of your income for one year. Very few people can live on 55% of their income. Can you?

Social security disability pays an average of $1,004 per month IF you can qualify. In 2008 only 39% of those that applied qualified. In either case, it can take many months of “working” the system to see the money.

How Much Disability Coverage Do You Need?

Disability insurance provides income replacement when someone experiences a long term illness or accident. This is paid in addition to any government disability received.

Having a long term disability can be very emotionally draining.

The last thing you and your family need is the worry of how you will pay your bills. Can you imagine worrying about whether or not you will lose your house because you can’t make the payments? Disability insurance takes all those worries away.

When considering disability insurance, the first thing you should do is check to see if your employer provides coverage. If so, determine how much. Many employers will put a cap on the monthly amount the employee can receive or the amount of time (such as two years) to save money on the premiums so it may be inadequate coverage.

When shopping for disability insurance, there are many options available. It is imperative that you work with an insurance agent so you know what you are buying!

The Devil is Always in the Details

Remember, this is income replacement so it is not inexpensive. If you find a policy that is inexpensive, it most likely means there are restrictions which can be very prohibitive. So be sure to read the fine print to understand exactly how the coverage works.

For example, does it cover you only if you can’t work in your occupation but won’t cover you if you can work in some other occupation, say a clerk at McDonald’s? Sure the premiums are much less but is it worth it? Most financial planners will tell you no.

When looking at what insurance coverage you need, always start with health insurance. After that, consider disability insurance. It may save your life!

Leslie Ellis, a licensed insurance agent, is with New York Life. She helps individuals and small business owners make informed decisions about their financial future. She provides annuities, health, life, disability and long term care insurance to both individuals and groups.

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