What Is Disability Health Insurance?
Disability Health Insurance
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What is disability health insurance? This term could be in reference to two different types of insurance. First, there's regular health insurance which provides various types of health care with differing levels of coverage, including provisions for people living with a disability. There is also disability income, which is a form of coverage that replaces lost income in the event the insured becomes disabled or seriously ill and is unable to work.
Disability health insurance is offered my many different insurance companies; there may be dozens of companies willing to offer health insurance as well as disability income insurance. At least one in three Americans will become disabled before they reach the age of 65, and the average term for disability in two and a half years. It might not be that long, perhaps only 90 days. Still, imagine what 90 days of no income could do to your finances.
It is estimated that 80% of working Americans do not have sufficient disability health insurance. Interestingly enough, many more Americans have life insurance policies in place.
The Importance Of Disability Health Insurance
While most people have a life insurance policy in place, the odds are actually much greater that the average person will become temporarily disabled than they will suddenly die. If you become seriously ill or disabled, how will you take care of your family? Do you have a large savings account that is capable of paying three months, six months or even one full year of regular expenses?
Perhaps you will depend on workers compensation, if you are injured on the job, or a longterm disability plan that your employer provides. A group insurance policy usually replaces 50% of your total paycheck, and that money is taxable. Group policies are also known to be inflexible and sets maximum monthly caps on all payments. In contrast, an individual policy offers more flexibility and income that is tax free.
Disability Health Insurance Protects Your Savings
Some people may choose not to purchase disability health insurance and simply save money to their savings account by avoiding monthly premiums. However, doing this can substantially change your future and even ruin your longterm financial planning. What if you are trying to pay off a mortgage? What if you are hoping to retire by a certain date or are planning on a vacation next year? You're not really borrowing from your savings account—more like stealing change from your other pocket.
Purchasing disability health insurance is an investment in a way, and the best way to insure your future. With disability income you can maintain your living standard, retain your independence (meaning no begging for money from relatives) and keep your financial plan in tact.
Plans can always be customized to fit your situation if you have special needs. Maintaining your living standard on a portion of your income may only be a matter of re-budgeting your finances. Disability income can at least cover the major expenses and help make your future secure.
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