Before they turn 65, 30% of people currently in their 20’s will become disabled. Those odds show that the chances of becoming disabled are actually pretty high. It is a wonder that disability insurance is not more widely accepted. But unfortunately, many people skip out and getting covered. Most of the time they feel that they are invincible, or they have some group coverage through work, or they feel that individual coverage is just too expensive.
There are many different nuances to disability insurance that can cause policies to vary widely. Some policies include riders that will cause a claim to be denied if the disability is due to a certain event (such as a rider for someone who already has a bad back; back injuries won’t be covered). There are policies that cover a person if they cannot work their own occupation and others that cover if they can’t work any occupation. Some have inflation protection, others pay a flat amount. On top of that there are differences between insurance companies to deal with. With so many nuances and choices it is easy to see that a person can get overwhelmed and end up not getting any insurance at all.
When you are shopping for insurance the most important thing you can do is go with a reputable company. This means one that has a history of paying claims, and a history of not raising rates. They should be financially fit, and have a good history behind them. If you buy cheap insurance, expect cheap service and payouts. For example, I know of a CPA who in his mid-30’s was diagnosed with a disease that left him unable to sit for long periods of time. This individual had the foresight to purchase own occupation insurance through a reputable company. While he is technically disabled, he is still able to earn an income, and he went on to produce his own hunting and outdoors show. All while collecting disability payments because he could not perform the duties of the occupation he was in when he became disabled.
Is disability insurance right for you? The choice is yours as to how much risk you are willing to take. If others are relying on you to provide for them, you should at least have enough insurance to pay for the rent or mortgage in case you are injured or sick (sickness causes more disabilities than injuries) and can no longer work. Even if your spouse also works, there is a chance that his or her income might not be enough to pay the bills. Taking care of an injured spouse will be emotionally draining, and often causes the well spouse to cut back their hours at work (or worse: file for divorce). This reduces the family income even further. Most disability insurance for young and healthy workers is fairly inexpensive. Is it worth giving up eating out once a month in order to protect your earning ability?
Do you have a disability insurance policy?
We don’t have any disability insurance, but it is something that we want to look into.
Disability insurance is meant to cover necessary income if you can no longer work. We had long term disability when I worked, but covered the short term disability possibility by having enough socked away to cover our needs before the long term kicked in.
My girlfriend has disability insurance through her work and used it to get foot surgery! She was out 10 weeks and since her job requires her to walk it qualified (thankfully!)
Losing your income overnight can be difficult to say the least! I’ve got good insurance in place.
People always seem to focus on cost with disability, but a key point you made is to go with a reputable company. Insurance needs to be there when you request help. If you have a low cost policy that doesn’t pay, you just flushed cash down the toilet. Great tips.
You’re right on the mark in recommending to go with a reputable company. With disability this can be even more important, as the “rules” of the policies can vary in ways that can hurt you when you need to file a claim. I would take that recommendation one step further and suggest you compare the top companies, as their premium rates can also vary significantly.
One hundred percent of working women who take maternity leave experience a disability lasting at least six weeks. Short term disability covers this exposure, but the awareness is very poor.
Very good point Kevin.