Everyone dreams of the day they no longer have to work for a living, but no one ever expects it to be from an illness or injury. What happens when an accident prevents you from working and supporting your family?
We live in a dual-income world, and unless your spouse is making six figures on his or her own, not being able to work could mean disaster. How can you make sure that you and your family are protected if you can’t work? Two words: Disability insurance.
Why You Need It
In your younger years, you think you’re invincible. You may think it could never happen to you, but the harsh reality is that it can—and it does. According to the Social Security Administration, one-in-four 20 year olds will experience a disability for 90-plus days before they reach the age of 67. While these disabilities may not be caused by worst-case-scenario incidences like spinal cord injuries, the majority of disability claims come from back injuries, cancer, heart attacks, diabetes, and other illnesses.
With disability insurance in place, you have the peace of mind to focus on your health and well-being, without having to worry about how your family will make ends meet.
Types of Disability Insurance
There are two types of disability insurance: short-term and long-term coverage. Both coverages replace a portion of your monthly base salary—up to a specific cap—during disability. Some long-term policies help with additional services, such as training to return to the workforce.
Generally, short-term disability insurance:
- replaces 60-70% of your base salary
- pays out for a few months up to a year, depending on the policy
- may have a short waiting period before your benefits are paid
Meanwhile, most long-term disability insurance:
- replaces 40-60% of your base salary
- benefits end when your disability ends, such as when you reach remission and can return to work
- typically have a 90-day waiting period before benefits are paid
However, different disability policies have different definitions for what it means to be “disabled.” Some policies only pay if you can’t work any job for which you are qualified, while other policies will pay if you can’t perform a job in your occupation. Some policies pay a portion of the benefit if you can still work part-time, and others will only pay if you can’t work at all.
What Can Affect Your Premiums
Most people purchase disability insurance through their employer. However, if you don’t have enough disability coverage through work—or you are self-employed—consider purchasing your own disability insurance coverage.
There are some important factors that may affect your disability insurance premiums, including:
- your age and health – the older you get, the more likely you are to have health problems
- your gender – women usually file more claims, so they typically pay higher premiums
- if you’re a smoker – with all the health risks that come with tobacco products, you are more likely to need disability coverage
- your occupation – if you have a physically demanding or relatively dangerous job, you will likely pay higher premiums
- how your policy-holder defines “disability” – generally, the broader the definition, the higher the premium
- length of waiting period – known as the “elimination period,” you can reduce the premium by increasing the waiting period before your benefits kick in
- your income – the higher your income, the more you have to protect, therefore the more you’ll pay for coverage
- length of benefits – the longer you need the benefits, the more you’ll pay for coverage
- extra features – like cost-of-living adjustments, will raise your premiums
Other Disability Protection
There are a few other ways in which you can protect yourself and your family from a disability. The following programs offer financial help in the event of a disability—but they all have their own limitations:
- Social Security – social security pays disability benefits, but it is difficult, time-consuming, and the average payments are low and typically not enough to pad your lifestyle
- State disability programs – states like California, Hawaii, New Jersey, New York, and Rhode Island all have state disability programs that offer short-term disability coverage for up to six months
- Workers’ compensation insurance – this insurance replaces part of your income if you’re disabled from a work-related injury
While these programs may help in the event of a disability, they won’t fully cover losing the ability to work. Disability insurance is the best safety net available for your future.
While we never want to use disability insurance, it’s better to have than not. Call us today at our Martinsburg office at 304-263-3361, or the Inwood office at 304-229-7227 to talk to an agent today. You can also contact us for a free quote on our website here. Ensure that peace of mind for you, your family, and your future!
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