Avoiding Financial Ruin with Disability Insurance
Avoiding Financial Ruin with Disability Insurance
You likely already have life insurance to protect your family against the financial adversity they could face after your unexpected death. And you’ve probably insured your home, cars, and other personal possessions against the financial loss that can result from fire, theft, or damage. But what have you done to protect yourself and your family against an injury or sickness that affects your ability to work? Do you have disability insurance?
The reality of how long you and your spouse could stay afloat if one of you were to lose your income due to a disability is sobering. On one income you may no longer have the ability to pay your mortgage, car payments, and other bills. If you are without disability insurance, tapping into home equity, retirement savings or credit cards can offer a temporary solution with damaging long-term consequences. Disability insurance offers an affordable method to maintaining your lifestyle without creating additional debt for your family.
There are many different ways to obtain disability insurance. You may have group coverage at work, through unions or membership groups and, depending on the nature and cause of your disability, you may also qualify for workers’ compensation, Social Security, and veterans’ benefits. Without the benefit of group insurance, individual coverage is a must.
There are many different types of disability insurance contracts and several definitions of disability. Consider whether you contract includes:
- A favorable definition of total disability that is consistent with the risk of your occupation and, at a minimum, ensures the payment of benefits in the event you suffer a “loss of income.”
- A non-cancelable, guaranteed renewable clause that states the insurance company cannot cancel the policy or increase the premium until a certain age (as specified in the policy).
- Benefits that are payable until age 65 or later.
- A waiting period consistent with your overall financial plan. The longer you wait to receive benefits after your disability, the lower your premium. You can purchase coverage that provides benefits on the 31st day of disability or up to two years later. Whichever option you choose, make sure you can handle the financial exposure.
