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One road you might take is to apply for Social Security Disability Insurance (SSDI). But payments can be low, and it may be difficult and time-consuming to qualify. Another path would be to pay your living expenses with your retirement savings. But once you actually reach retirement age, you’ll have less money to spend.
That’s why you might choose a third route—disability insurance, which pays you a percentage of your lost wages once you can no longer work. It comes packaged in two varieties: short term, which begins paying within two weeks of your disability and lasts up to two years; and long term, which has a waiting period measured in weeks or months, and which pays benefits for several years (the exact amount of time varies).
You usually buy disability insurance through your employer, though you can also buy it through an insurance broker if you’re self-employed (usually at a higher price than you’d pay for a group plan). Either way, this insurance is well worth it if the unfortunate, and unexpected, happens during your working years.
Accidents happen, both on the road and off. And those requiring medical attention may roll around more often than you might think. In fact, one in five Americans visits the ER each year, according to the government’s National Center for Health Statistics.
These accidents can be surprisingly expensive, even if you have medical insurance.
Out-of-pocket expenses can add up: You might have to cover not just medical expenses such as copays and deductibles, but also nonmedical expenses such as lost wages and transportation. (You’re not going to be driving yourself around when your leg’s in a cast, are you?)
Accident insurance can help you meet that financial challenge. It’s not medical insurance or disability insurance, but it can be used to supplement that kind of coverage.
Although you can buy an accident insurance policy on your own, it can be costly. Generally, a more affordable option is to purchase it through your employer, union or professional association, many of which may offer it as an optional benefit at more affordable rates.
No one likes to think about the aftermath of an ugly crash on the highway. Unfortunately, nasty accidents happen all the time, both on the road and off. In fact, accidents are the fourth-leading cause of death for all Americans, the government says.
Racing to the financial rescue is accidental death and dismemberment insurance. AD&D insurance is a little like life insurance: If you die, it pays a benefit to the person or people you designate—but only if your death is the result of an accident. And if you suffer an injury that doesn’t kill you—but is serious enough that it results in loss of a limb, eyesight or hearing, for example—you yourself can receive money.
The least expensive way to buy AD&D coverage is generally through, again, your employer, union or professional association, which can obtain discounted group rates. You can also buy an AD&D insurance policy on your own, in which case the cost will vary based on factors such as your age, lifestyle and line of work.
Critical illness insurance
Getting hit by a major illness can make for a quick trip to the poorhouse. In fact, a 2005 Harvard University study found that a majority of personal bankruptcies were rooted in medical problems; even if people were covered by comprehensive health insurance, out-of-pocket costs, which averaged nearly $18,000, were enough to send them in the direction of a bankruptcy filing.
Critical illness insurance provides a lump sum if you’re diagnosed with an illness specified in the policy—illnesses such as a heart attack, cancer or stroke. Again, it’s not a substitute for health insurance, but a supplement for it, one which can cover out-of-pocket medical and non medical expenses such as out-of-network visits, caregiving and lost wages.
You can buy a critical illness insurance policy on your own, but you’ll generally get a better price if you can purchase it through your employer, union or professional association.
Long-term care insurance
As you chug along when you’re older, chances are you’ll need assistance. Among people turning 65, about seven in 10 will need some sort of long-term care, according to 2017 figures from the Department of Health & Human Services. And those seniors will need that care an average of three years. Fully 20% will need care for five years.
Social Security income isn’t enough to cover long-term care expenses. Medicare and other forms of health insurance don’t cover them. And while Medicaid can cover long-term care, you may have to spend down much of your assets to qualify—money you might rather save for your spouse or heirs.
Long-term care insurance (LTCI) can help you avoid this dead end. While terms vary with different policies, LTCI reimburses you when you can no longer handle certain everyday activities, such as bathing and dressing, on your own. You receive money you can use to pay someone who can assist you—money that you might be able to spend on home services, adult day care or a nursing home.
If you want LTCI, speed pays. You can’t buy it if you’re already receiving long-term care. And you might not be able to buy it if you’re too banged up already. The younger and healthier you are, the lower your premium will be.
Insurance policies contain exclusions, limitations, restrictions, reductions in benefits, and terms for keeping them in force. A financial professional can provide you with costs and complete details.