Specialist, LTCi, DI, Annuities, Life, Designs In Life, LLC, Utah
No. Disability Insurance is a terrible "investment" because you may never get any return on the money you pay in (premium). If you have a "return-of-premium" on the policy and never apply for the replacement of income due to accident or injury, you'll get money back, but you lose the time value of the money you paid in over all those years.
However, all of that is due to the fact that no insurance policy, DI or otherwise, is designed to be an "investment". Buying a DI policy does not provide a "return" that exceeds money paid in premium unless there is an event that triggers the payout of benefits. Benefits are not technically an investment return. If premiums are paid out-of-pocket, the benefits are not even income-taxable.
In other words, one buys DI insurance not to "get gain" but to be "made whole". This may appear to be a semantics problem, but it is not. One should never look at the payment of premium into a DI policy as an investment. One may look at the payment of premium into a DI policy as "insuring a portion of one's income against loss due to a prolonged recovery from accident or illness."
Disability insurance is not really meant to be an "investment". Disability insurance is meant to protect your most valuable asset, your ability to earn a living. Unless you are independently wealthy or have built a residual income stream that pays you enough money to live the rest of your life without any effort on your part, you need disability insurance.
Most disability policies have limits up to 70% of your monthly income in case of an injury or illness so severe you can no longer work. There are a lot of moving parts to purchasing a good disability policy such as waiting periods, elimination periods, benefit periods, both health and financial underwriting and it can be very confusing to the novice. I recommend using an experienced disability insurance broker who can help you navigate this maze of coverage. Never buy insurance based on price, it is about having the right product at the best price. Good luck!
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However, all of that is due to the fact that no insurance policy, DI or otherwise, is designed to be an "investment". Buying a DI policy does not provide a "return" that exceeds money paid in premium unless there is an event that triggers the payout of benefits. Benefits are not technically an investment return. If premiums are paid out-of-pocket, the benefits are not even income-taxable.
In other words, one buys DI insurance not to "get gain" but to be "made whole". This may appear to be a semantics problem, but it is not. One should never look at the payment of premium into a DI policy as an investment. One may look at the payment of premium into a DI policy as "insuring a portion of one's income against loss due to a prolonged recovery from accident or illness."
Most disability policies have limits up to 70% of your monthly income in case of an injury or illness so severe you can no longer work. There are a lot of moving parts to purchasing a good disability policy such as waiting periods, elimination periods, benefit periods, both health and financial underwriting and it can be very confusing to the novice. I recommend using an experienced disability insurance broker who can help you navigate this maze of coverage. Never buy insurance based on price, it is about having the right product at the best price. Good luck!