Disability insurance is paycheck protection 24/7, unlike workers comp, which pays for injuries experienced on the job. Social security disability can help, but in most cases it’s inadequate. It is possible that you may have short term disability through your employer’s group benefit plan. Still the combination of all three will generally fall short of sufficient coverage.
The average American worker has 90 days in cash reserves. The average long term disability period is 30 months. The odds of being disabled during your working life are a statistical probability, more than death. Is disability insurance protection with 5-8 % of your pay? You make the call!
Disability insurance is not necessary if you have enough savings to fund your lifestyle. Many people have student loan payments, mortgages, property taxes, and car notes along with expenses to feed and cloth their families. Plus, if the primary breadwinner is disabled there may be additional medical expenses.
If you can afford to meet these ongoing obligations without an income, then you don't really need a policy.
Co-Founder, TermInsuranceBrokers.com, Goldenzweig Financial Group, Las Vegas, Nevada
I would say yes. Your ability to earn income is likely your biggest asset, so what would you do if you lost that ability?
Some important things think about when trying to figure out if disability insurance is right for you is:
1) If you became disabled, could you continue to pay your bills (mortgage payments, car payments, credit card payments, etc.)?
2) How long would your savings last?
3) Would you still be able to retire when you planned or send your children to college?
4) What happens to your bonus compensation and retirement contributions? Could you keep paying the overhead expenses if you own a business?
Most disabilities are not work related and therefore not covered by worker’s compensation and it can be very difficult to qualify for social security disability as many disability claims are denied - even if you are approved for Social Security, the payments will probably be significantly less than you earn.
Disability insurance can protect you from losing your income and is one of the most important types of insurance you can buy, especially for business owners, key employees, physicians, attorneys, and anyone who has family that depends on their ability to provide income.
A big advantage with disability insurance is that when you have a qualifying claim that triggers disability payments, the monies paid to you are paid as tax-free income (as long as you paid the prmeiums with your after tax dollars - most people do).
Please note, when you're looking to purchase disability insurance, work with an experienced, independent disability insurance agent who can work with you on a personal level to help you determine what program is suitable to your needs and budget (disability insurance policies are very customizable). Make sure you pay attention to the language in the policy - most importantly the definition of disability. The definition of disability is the most important aspect of your disability insurance policy and you want to secure the best definition you can ("true own occupation" is very much regarded as the best definition you can have).
I hope the information is helpful - please feel free to contact me for assistance with your disability insurance needs, including quotes and program comparisons, and if you have any other questions. Thanks very much.
Agent Owner, Gilmore Insurance Services, Marysville, Washington State
Is disability insurance really necessary? No, of course not. It is only necessary if you do not have the available liquefiable assets on hand to use to replace lost income. Or if you desire not to sell assets for pennies on the dollar when you become disabled. Each person really has to decide if DI is really necessary for them. For most, it is.
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The average American worker has 90 days in cash reserves. The average long term disability period is 30 months. The odds of being disabled during your working life are a statistical probability, more than death. Is disability insurance protection with 5-8 % of your pay? You make the call!
If you can afford to meet these ongoing obligations without an income, then you don't really need a policy.
Some important things think about when trying to figure out if disability insurance is right for you is:
1) If you became disabled, could you continue to pay your bills (mortgage payments, car payments, credit card payments, etc.)?
2) How long would your savings last?
3) Would you still be able to retire when you planned or send your children to college?
4) What happens to your bonus compensation and retirement contributions? Could you keep paying the overhead expenses if you own a business?
Most disabilities are not work related and therefore not covered by worker’s compensation and it can be very difficult to qualify for social security disability as many disability claims are denied - even if you are approved for Social Security, the payments will probably be significantly less than you earn.
Disability insurance can protect you from losing your income and is one of the most important types of insurance you can buy, especially for business owners, key employees, physicians, attorneys, and anyone who has family that depends on their ability to provide income.
A big advantage with disability insurance is that when you have a qualifying claim that triggers disability payments, the monies paid to you are paid as tax-free income (as long as you paid the prmeiums with your after tax dollars - most people do).
Please note, when you're looking to purchase disability insurance, work with an experienced, independent disability insurance agent who can work with you on a personal level to help you determine what program is suitable to your needs and budget (disability insurance policies are very customizable). Make sure you pay attention to the language in the policy - most importantly the definition of disability. The definition of disability is the most important aspect of your disability insurance policy and you want to secure the best definition you can ("true own occupation" is very much regarded as the best definition you can have).
I hope the information is helpful - please feel free to contact me for assistance with your disability insurance needs, including quotes and program comparisons, and if you have any other questions. Thanks very much.