Many people don't consider that their most valuable asset is their ability to make a living. If you can't work for an extended period of time because of illness or injury, disability insurance pays a portion of your income if you can't work.
Why You Need Disability Insurance
The age-old false belief of, "It won't happen to me" is a dangerous gamble.
You may think that the probability of missing work for a few months or even years is very small. If you are young and healthy, it might seem even more remote. However, according to the Social Security Administration, more than 25% of 20-year-olds will experience disability for 90 or more days before they reach normal retirement age1.
Because many people believe the chance of missing work is remote, they don't create an emergency fund. Ony 48% of American adults have savings to cover three months of living expenses. In fact, nearly 48% of American adults say that if they received an unexpected $400 bill, they would have to take out a loan or sell something in order to pay it2.
Types of Disability Insurance
There are two types of disability insurance -- short-term and long-term. While you are unable to work, both pay a portion of your salary up to a cap. Short-term typically covers 60-70% of your base salary for up to a year. You may have a short waiting period before receiving benefits. Long-term typically covers 40-60% of your base salary. If you become unable to work, benefits usually begin after a 90-day waiting period and end when the disability ends, after a certain number of years, or at retirement age.
When choosing a disability policy, be sure that you understand how it defines "disabled." Some policies consider disability as not being able to work for any job for which you are qualified while others consider your ability to work at a job in your occupation. In addition, some policies pay out only if you are unable to work while others will pay a portion of your benefit if you can work part time.
Choose the Right Policy for You
At Bob Johnson Insurance, we can provide quotes from multiple companies to help you find the best rate. In addition, we can help you navigate the terms of each choice so you can choose the policy that has the options you want and need.
Click the button below to receive a free quote, or contact us to schedule a visit in person.
- Social Security Administration, Disability and Death Probability Tables for Insured Workers Born in 1997, Table A.
- Federal Reserve, Report on the Economic Well-Being of U.S. Households in 2016, page 26.