What is Disability Insurance?
Disability Insurance is the industry name for a plan that provides for periodic payments of benefits when a disabled insured is unable to work. The insurance product is designed to replace anywhere from 45 to 65% of your gross income on a tax-free basis should illness keep you from earning an income in your occupation.
If you’re unable to work due to a sickness or injury, Disability Insurance can help cover your essential living expenses. It can help you pay bills like your mortgage, tuition and car payments, and help cover expenses for food, clothing and utilities. By replacing a portion of your income, Disability Insurance can help protect your financial security until you get back on your feet and return to work. It does not: Cover medical care or long-term care services.
10 Essentials of Disability Insurance
1. If you have dependents relying on your income, disability insurance is a must.
If you or your loved ones depend on your income to meet living expenses, it is crucial that you have disability protection. It often comes as a surprise to many that, should you be expected to be away from work for under a year, you will not be entitled to social security benefits. The impact of an entire year without income can have major long-term effects on your financial well-being.
2. Providing yourself disability coverage means that a portion of your income will be compensated if you are unable to work.
If you get sick or hurt, and it prevents you from working, disability coverage can contribute towards paying for your most key expenditures, namely grocery costs, utilities, school fees, housing costs, and transportation expenses.
3. Extended leave is more often caused by illness rather than injury.
The common belief is that disability arises from accidents, however, in truth, most prolonged absences are caused by illness.
4. Even if you are young and healthy, disability insurance is a good idea.
If you are 20 years old today, the probability of developing a disability before your 67th birthday is nearly 25%. The good news is that obtaining disability insurance is more accessible and inexpensive if you purchase long before you need it.
5. The chance of becoming disabled during your most productive years is not as low as you might expect.
Many people do not realize the significant likelihood of experiencing disabling illness or injury. The average 20 year-old is more likely to become disabled than to die before age 67. Being insured against this provides a source of income support if health issues compromise your earning potential.
6. In general, a good target portion of your after-tax income to insure is 60-80%.
The most important thing to ensure upon becoming disabled is that your essential costs of living are met. Seventy-two percent of the average person’s spending goes towards paying for vital things such as mortgage/rent payments, food, car/public transportation costs, healthcare, and education. Our simple disability needs questionnaire will help us to determine your specific situation and let us guide you in deciding how much protection makes sense for your lifestyle.
7. Even if you cannot afford optimal disability coverage, it is still worthwhile to have some protection.
It may not always be possible to purchase the ideal amount of disability insurance, but it is still important to make sure that you have a sufficient amount to pay for rent or mortgage installments. Disability insurance is not as expensive as you might anticipate and is a valuable investment towards making sure you and your family can stay in your home should you ever become unable to work. As an example, it would be possible for a healthy 35 year-old male to pay as little as $25/month in premiums but receive a $1,000/month benefit in the event of disability.
8. Be informed about the disability coverage provided by your employer.
Your employer benefits package may include some disability insurance. However, take a close look at the details. Limitations and conditions of group benefits could mean that relying solely on employer-provided insurance might not be sufficient.
9. Trust the experts
It is key to consult financial professionals regarding the amount of insurance that is right for you. Being properly insured against disability is a critical part of charting a secure financial plan to protect your and your family’s future.
10. Know who you are buying your insurance from – reputation matters.
When you sign-up for a disability insurance policy, the company you buy from is making a long-term commitment to you. In many cases, disability benefits will need to be disbursed for a substantial length of time, so it is sensible to choose a reliable firm with experience and an established reputation.
If you have any questions on polices or have additional questions before get a free quote, please contact our offices today.
2821 Oceanside Blvd. Unit E
Oceanside, CA 92054
Email: email@example.com or firstname.lastname@example.org
CA License Number: 0C175088