Top 5 Reasons to Consider Disability Insurance

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Disability insurance can help replace lost income due to an injury or illness for either a short period of time or for years.

  1. You have no idea what kind of illness or accident can occur. Disability insurance covers much more than not being able to work due to a bad car accident. Most causes of disability are due to medical conditions and not specific injuries. Just a few other examples include:

first-aid-kitAlzheimer’s Disease, Cancer, Arthritis, Rotator Cuff, Migraines, Parkinson’s Disease, Carpal Tunnel, Bipolar Disorder

  1. You have no idea when a disability can occur. Even though the likelihood of becoming disabled diminishes as we get older, there is no way to know if an accident or medical condition is going to happen. The likelihood simply decreases because we tend to work less or participate in less hazardous activities as we age (some of us!). Let’s say you are 40 and have built an excellent business but suffer from depression. Or you’re just starting your career at 22 and hurt yourself while vacationing.
  2. Your savings will not cover your expenses indefinitely. While the typical suggestion of having accessible savings of 3-6 months of expenses is good idea, what happens if you are disabled for one year? Depending on your circumstances you may go through your savings in a short period of time, then you are forced to dip into retirement and other investments. Are your other investments enough to cover a year? What about longer? Disability insurance benefits can be used to pay for food, housing, student loan payments, credit card payments, pet care, phone bills, etc. There is no limit on what you can use the benefit for.
  3. Social Security Disability is not a good backup plan. In order to receive SS Disability benefits your disability must last longer than 12 months or lead to death! That’s a terrible thought. Not all injuries last a year and they most certainly don’t all end in death. The process for claiming Social Security Disability is also lengthy, difficult, and may require an attorney.
  4. My work provides disability insurance. At first, this seems like a positive. However, if you employer pays for your coverage keep in mind that ay benefits paid to you will be taxed as income whereas if you pay the premium, you are not taxed. Additionally, this coverage is not portable meaning that you cannot take it with you if you go to another employer or leave your job. When you then apply for coverage again it could be higher because you are older, etc.