Disability insurance is probably the most needed, yet most neglected coverage of all. This is a question you need to ask yourself: “If I am unable to work, who is going to pay my bills?” This coverage enables you to continue paying the premium of all your other insurance coverage including life and health insurance. Chances are if you are disabled, you will need to continue paying your health insurance premiums for sure.
To a person who is employed, their employer is required to carry workers compensation insurance. This said employer might also provide a group plan that offers short term and long term disability as well. Keep in mind that while you are covered by workers compensation while on the job, this offers no protection to you while you are out of the office. So if your employer does offer disability, it is important to take advantage of this coverage. If not, be aware that this coverage is vital to your financial foundation and consider purchasing your own policy.
To the self employed person, disability income insurance becomes even more vital, for in most cases you have no workers compensation insurance or disability income insurance coverage at all. Here is another question to ask yourself : “How long can I survive without income coming in?” The answer to this question is different for every person, and that is why disability income policies come with various elimination periods. The elimination period is basically a waiting period before you will begin receiving benefits, usually stated in 30 day increments. The shorter the elimination period, the higher the premium you will pay.
You will have to decide how long you wish the coverage to last. While most of us would like to think we will spring back in 2 weeks, the average disability lasts 2.5 years.With an average like this, you can see how vital a disability income policy can be to your finances! Many insurance companies have various riders that can be added to enhance the basic coverage. If you have specialized training in an industry, look to add an own occupation rider. The own occupation rider allows you to stay on disability for a longer period until you are able to perform your own occupation again. The flipside is usually after 2 years of disability, you will be tested to see if you can perform any other occupation to get you off disability.
No one expects to be disabled, but that is what insurance is all about: Being prepared for the unexpected.