Which Is More Important: Life Insurance or Disability Income Insurance?
Life insurance and disability income insurance are two functionally different insurance products. Thus, neither is inherently more important than the other. Life insurance bears more weight for financial providers of households interested in protecting their families after death. Disability income insurance assists financial caretakers with limited options during periods of lost income.
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Life Insurance Basics
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Life insurance products purchased by an individual pay benefits to his family, or beneficiaries, upon death. Common policy types include term life insurance, purchased for a stated period of time, and whole life insurance, which accrues and pays benefits for life. Life insurance serves as a form of financial security for workers who want to give their families peace of mind protection in the event of unexpected death.
Life Insurance Premiums
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The payout risk factors associated with life insurance are related to the healthful nature of your activities and behaviors that help extend or restrict your life. Some companies require health screenings prior to issuing life insurance and health questionnaires are normal. Smoking, alcohol use and weight are among behaviors companies inquire about.
According to the website Life Insurance Agency, "One of the keys to securing affordable life insurance rates is staying healthy. When you do this, you will discover more money remaining in your pocket. It is also important to get regular checkups and put in place steps to stay healthy."
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Disability Income Insurance Basics
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Some employers provide group disability income benefits to employees. Government programs occasionally offer support to qualified individuals. This leaves many Americans to seek out private individual disability income insurance through an insurance provider.
Disability income insurance is designed to offer a replacement income source to cover a major percentage of lost income when you are sick or injured and unable to work and earn income for a period of time.
Disability Income Insurance Premiums
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Disability income insurance premiums are determined by age, sex, occupation, pay level and medical history
With long-term disability insurance protection, designed to continue through your working life, you have incentive to buy early as some programs maintain the same premium as you get older. Older workers have a hard time accessing disability plans and getting reasonable rates.
Considerations
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Radio personality Dave Ramsey states in regard to cash value policies, which combine life insurance and savings products into one package, "Do not invest money in life insurance; the returns are horrible."
As you consider the need and importance of disability income insurance, consider your chances of becoming disabled, the financial impact of lost income, other disability income sources you have available and what types of coverage and terms to seek for your policy.
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References
- Photo Credit saving the life image by Andrey Rakhmatullin from Fotolia.com
