Contrary to popular belief your most important asset isn’t your car, home or any other tangible, valuable asset, it’s your ability to make a living with a continuous stream of income.
Many people choose to rule out disability insurance entirely because they don’t believe that they would endure a circumstance in which they would be out of work for a long period of time. For some lucky individuals this can be true, but for most, there are instances in which life can be unpredictable and the best way to prepare for the uncertainty of the future is to plan in advance. The Social Security Administration reports that one in four of today’s 20-year-olds will become disabled 90 days or more before they turn 67, most of which assumed they did not need disability insurance and did not prepare for that loss of income.
What disability insurance does is it pays a portion of your income in the event that you are unable to work for an extended period of time due to an illness or injury in the future. It essentially gives you a safety net.
We’ve discussed what disability insurance is but now you must be wondering, “why do I need it?” There are a few reasons, but the biggest one is that the future is unpredictable and it’s always better to plan in advance when faced with an unfortunate circumstance down the line.
Most young people won’t even consider purchasing a disability insurance policy because the chances of an injury or severe illness are remote, especially when you are young and healthy. However, 68% of the general working population will experience a disability lasting 90 days or more before they reach 67 according to the Social Security Administration.
When thinking about disability insurance, most minds tend to drift towards the extreme cases that result in complete immobilization, but those are the extremely cases. Back injuries, heart attacks, cancer, diabetes, etc. are the leading cause to most disability claims. It is important to be prepared in the event that anything down the line may hinder your stream of income.
There are two main types of disability insurance:
short-term and long-term.
In the table below, we will highlight the differences between the two.
|Short-Term Disability Insurance||Long-Term Disability Insurance|
|Replaces 60% to 70% of base salary||Replaces 40% to 60% of base salary|
|Pays out for a few months to one year||Benefits end when disability ends|
|May have a short waiting period before benefits are distributed||Longer waiting period of 90 days after disability before benefits are distributed|
For many people, long-term disability insurance is the better options because it lasts longer and is far more cost-effective than short-term disability insurance. Short-term disability insurance can provide complimentary coverage but won’t be enough for most people on its own because it is intended to cover an individual for a short period of time. If you would like to learn more about disability insurance, fill out the form above, or give us a call!