A variety of unexpected medical problems—including complications during pregnancy, back injuries, recuperation from seemingly minor surgery, even depression—can make you unable to work for a period of time. If this happened to you, how would you pay your bills and support your family? If you’re not sure, an individual disability insurance policy can help.
Disability insurance replaces a portion of your salary if you become disabled and cannot work. Without it, you may have to spend your savings, retirement, college and other funds for everyday expenses.
Your chances of suffering a disability are greatest during your working years—significantly greater, in fact, than your risk of a premature death. According to a 2002 report by the Disability Insurance Resource Center, a 42-year-old has an almost 4 to 1 chance of becoming disabled for at least 90 days. Can you afford not to have an income for three to six months—or more?
Disability insurance varies widely based on the issuer and the state in which you live. Be sure to speak to a licensed financial professional who can explain the policy provisions and benefits thoroughly, including:
- How much it costs.
- What your benefit payment amount would be.
- What exclusions apply, if any.
- If the policy provides basic hospital, basic medical or major medical insurance as defined by the state insurance department.
- If payment amounts are impacted by Medicare benefits.
- Review the sources of income available to you if you should become disabled.
- Check the disability provisions in your employee benefits plan. Is this coverage adequate?
- Build an emergency cash fund that can cover living expenses for at least six months.
Speak to a licensed financial professional in your area.
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