Disability Insurance Needs
While many people have insured their lives so that their families can be taken care of if they die, most people do not take the time to insure against disability. A disability could actually be more devastating financially because income could stop coming in and no cash settlement may be provided.
Other People Are Reading
-
Replacing Your Income
-
The primary purpose of purchasing disability insurance is to protect your income if you are unable to continue working in a normal capacity. Most disability insurance policies pay a percentage of what you made before you were disabled. For instance, the disability insurance policy might pay as much as 60 percent of your pre-disability income. While it may be hard to live on 60 percent of what you made before, if you paid the premiums for the policy, you will not have to pay taxes on the benefits.
Postponing Premium Payments
-
With most types of insurance policies, if you stop paying the premiums, your policy will be canceled by the insurance company. However, with certain disability insurance policies, your premium can be waived while you are disabled. This means that you will not have to come up with the money to keep your policy in effect even though you are unable to work.
-
Short-Term Needs
-
While you may not be concerned with a long-term disability, most people have need for some short-term help at some point in their working career. For instance, if a woman becomes pregnant, she may need some time away from work to have the baby. A short-term disability insurance policy can provide benefits for this situation. If you hurt your back and need to be off work for a few days, your policy can provide benefits.
Likelihood of Need
-
While many people think that they will not need disability insurance, the likelihood of becoming disabled and needing to miss work is actually higher than you might expect. According to the American Council of Life Insurers, about one out of every seven people in the work force will suffer a disability that will keep them out of work for at least five years. If you were out of work for five years, you may be unable to pay your bills. Disability insurance helps mitigates against this risk.
-
