Disability Insurance: How To Protect Your Paycheck
By Eric Rucker on The Capital
Have you ever wondered what you would do if you could no longer work? If something unexpectedly catastrophic made you unable to perform the only job you’ve known or the job you went to college for?
Maybe you brushed it off thinking, “that won’t happen to me” or maybe it keeps you awake at night, worrying about how you would make ends meet and take care of your family. If so you have come to the right place, this article is about Disability Insurance (DI) and how it can help you protect your paycheck.
What is Disability Insurance?
Disability Insurance is when a person can receive income when they are no longer able to perform their job due to a disability. This income can last for a certain number of years or until a certain age and will be in addition to any disability benefits received from the government.
There are two types of Disability Insurance, Short Term, and Long Term. Short Term can span several months to a couple of years whereas Long Term can last from several years or until retirement.
The coverage terms “any occupation” and “own occupation” mean you will receive income if you cannot perform any job with reasonable education and training (any occupation) or if you are unable to perform the specific job that you were trained and educated for (own occupation) you will receive disability benefits.
According to the Centers For Disease Control and Prevention (CDC) 61 million adults in the United States live with a disability, which is 26 percent of adults or 1 in 4 adults.
As of 2015, the average length of an individual disability claim was 31.6 months. That is over two years, what would you do if you could not work for such a long time?
The probability of a person getting disabled in their working years is a lot higher than they may think. Disability Insurance would step in during that time you are unable to work and provide income that will help care for yourself and your family.
How Much Will Disability Insurance Pay Me?
Now I’m sure you’re wondering, how much will I receive from a Disability Insurance if I were to become disabled? The answer is, it depends on the type of policy you have.
Short Term policies will replace up to 80 percent of your monthly income and Long Term policies will replace around 60 percent. The monthly benefit will be determined based upon your income before you became disabled.
Also, Disability Insurance policies are subject to “elimination periods” which is the time from when you were first disabled to when you will start receiving benefits. You may be able to choose your elimination period and typical options are 30 or 90 days. A longer elimination period will result in a more affordable premium.
You may be thinking, hey that’s not enough and no it may not cover everything but think about what it will cover. It can put food on the table, keep a roof over your head and keep your car in your driveway. It can even be used to pay for any medical bills you receive during your recovery, in the case of Disability Insurance, something is better than nothing.
Consider This
Is Disability Insurance right for you? Answer these questions:
- In the event of disability, how long can you survive without a paycheck?
- How soon after becoming disabled do you want to start receiving benefits?
- If you were unable to work where would you get income?
- Do you know anyone who has become disabled? How are they making ends meet?
Where To Find It
So you understand the need and want to get Disability Insurance, where do you go to get it? Below is a list of the top insurers who offer Disability Insurance.
- Ameritas
- Assurity
- Fidelity Security
- Guardian/Berkshire
- Illinois Mutual
- MassMutual
- Metlife
- Mutual of Omaha
- Northwestern Mutual
- Ohio National
Disability Insurance can be there to help you financially when you become disabled and unable to work. With short and long term options you will be prepared for the unexpected and limit the financial hardship a disability can cause.
