Do I Need Disability Insurance?

Though you may think it highly unlikely that you will ever become disabled, either on the job or outside of work, you are mistaken. According to the Health Insurance Association of America, at age 40, for example, you have a 19% probability of suffering at least one disability lasting more than 90 days.

Even if you collect from workman’s compensation and government programs such as Social Security and Medicare, you probably will not receive enough to live comfortably. Individual long-term disability insurance is crucial. If you become disabled you can receive up to 80% of your regular salary.

Read the contract carefully for the definition of disability, exclusions, the payment amount, payment caps, and how long the policy will pay. Consider policies that cover only your working life. The policy should refer to your own occupation and cover partial disabilities. A longer waiting period will result in lower premiums.

Resource: Edelman, R. (1999, May 15). If my income stopped today would I be able to pay my bills? Bottom Line Personal, 4-5; Goodman, J. E. Everybody’s Money Book (2^nd ed.), (pp. 479+).

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