Planning For Disability Income Insurance
Disability Income Insurance
|
 |
Disability income insurance is simply a matter of good financial planning. Think hypothetically what could happen if you were injured or became gravely ill and had to miss several weeks or months of work. What will you do to pay for your regular expenses such as rent or lease, utilities, food, cars and other forms of insurance? If you are injured on the job then perhaps workers compensation could help you. But what if you are self employed or if you get injured off the job? Then you're practically on your own, with piling bills and no monthly income.
You could borrow from friends or family. Or you may have a savings account that you can reach into for emergency situations. (Yep, this is an emergency!) But what about your tuition fees? What about your next vacation? What about your retirement or your balloon payment on your mortgage? The more you reach into your savings account the more you can disrupt your financial planning. As an example, multiply your monthly expenses times twelve and see how much money will be drained from your savings if you are out of work for a year. You might actually go into debt!
Why You Need Disability Income Insurance
Disability income insurance can keep your financial plan on track by providing you steady income when you're out of work. In most cases at least 50% of your monthly income is sent to you by the insurance company until you are ready to work again. This portion of your normal paycheck is valuable when you're earning nothing!
What about social security disability? Can that help you? Actually, social security disability payments are limited to types of disabilities that last at least 12 months or result in death. Therefore a six month injury back injury would leave you helpless.
How about long term disability insurance that is offered through your group insurance policy with your job? Workplace disability benefits, provided you injured yourself on the job, can cover about 50% of your regular income. This money will help you out—and so will the individual disability income insurance policy. You need as much monthly income as you can get—as close to 100% as possible!
Unlike individual policies, group disability income insurance is taxable if the employer is the one paying the premiums. Many group plans will not cover bonus or incentive benefits. Finally, most of these plans have a maximum monthly cap which can cause the insured's income to drop significantly. An individual disability policy is also a protection against possible issues you may have with workers compensation.
Shopping For Disability Income Insurance
Do your research and find the best plan that's affordable for you. Notice the words “plan” and “affordable” were used. Plans should be affordable not cheap, so you will get the best coverage and the highest percentage of disability income. Also try using an on line insurance vendor so you can search by plan coverage—not by company names. There are well over one hundred insurance companies in the country, and you want your search to be fast and effective.
|
