Disability Insurance Essentials

A lot of clients ask me when it is the best time to purchase a disability insurance policy. My advice is to always purchase your disability insurance policy before you need it. Since no one knows when or if they will ever have a claim, you need to purchase your policy before you need it and while you are still healthy enough to qualify.

Here are some essential information to consider when it comes to disability insurance:

1. If you or others depend on your income – you need disability insurance.
   Life insurance is important if others are economically dependent on you. Disability insurance can be even more essential since you and others may be dependent on your income. If you have people who depend on your income – or if you depend on your income – you need disability insurance. Many people may be surprised to learn that Social Security disability benefits are not available if you are expected to be out of work for less than a year.One year without income could deplete your savings and have a significant impact on your finances.
2. Disability insurance replaces a portion of your income when you can’t work.
   If you were unable to work due to illness or injury, disability insurance can help to pay your most essential expenses, including food, utilities, school tuition, home and car payments.Most companies will not allow you to replace 100% of your income. Typically you can replace approximately 65-75% of your gross income.
3. Most long-term absences are due to illnesses, not accidents.
   While many people think that disabilities are typically caused by accidents, the majority of long-term absences are actually due to illnesses, such as cancer and heart disease.
4. You need it even if you’re young and healthy.
   Almost 1 in 4 of today’s 20 year-olds will become disabled before reaching age 67.
   What’s more, it’s easier and less expensive to get disability insurance when you’re young and healthy
5. The risk of a disability during your working years may be greater than you think.
   The risk of suffering a disabling illness or injury may be more likely than you realize. In fact, the average 20 year old is twice as likely to become disabled than to die before age 67. Disability insurance helps you to maintain a steady stream of income when you can’t work due to illness or injury.
6. A good rule of thumb is to protect 60-80% of your after-tax income.
   You will need to meet your essential living expenses if you should become disabled. Most of our consumer expenditures are to cover essential expenses like housing, food, transportation, health care and education.
7. Some disability insurance is better than no disability insurance.
   When budgets are especially tight, it still makes sense to buy enough disability insurance to cover the rent or mortgage and keep your family in their home should you become disabled.  Disability insurance is more affordable than you may think. It is important to work with an advisor who can find the most suitable policy that fits your budget.
8. Make sure you know how much disability insurance you get at work.
   A good place to start is to see if disability coverage is made available to you at work. You might want to look carefully at coverage, however, since group benefits alone may not be enough due to the amount of income being replaced, potential benefit limitations and types of income covered. If your employer is paying the premiums, the benefits may be taxable to you.
9. There is no substitute for good advice.
   Make sure you are working with someone who specializes in working in the disability insurance industry. A good broker will be objective since they work with many companies and can help you compare your options.
10. The financial strength and reputation of the company you buy from matters. 
    When you purchase disability insurance, the company you buy from is making a long-term commitment to you. If you become disabled, there is a chance you will receive benefits for an extended period of time, so it makes sense to buy from a company with experience, financial strength and a solid reputation. Make sure you check the financial ratings of the company.

For more information about disability insurance essentials or to request a quote comparison, contact Set for Life Insurance today!