What is Disability Income Insurance?
Whether you're part of a single income or dual income family if something were to happen to that income things would get tough. So why is it that so few actually insure that income? Some estimates say that less than 40% of Americans have coverage. I think the answer is that most people don't know what it is or where to get it, and/or they believe it's too expensive. Let's clear it up.
What is it?
Basically it's insurance that's designed to replace a portion of your income, usually up to 60%, if you were to become disabled and unable to work. If you couldn't work your bills would keep coming. After a certain waiting period, usually 60 or 90 days, your disability income policy would engage and pay you a set amount a month for a fixed number of months, usually 12-24, while you recovered and went back to work.
Why do I need it?
The obvious answer here is, "because you could become disabled and need help covering your expenses". But, I want to go a little deeper. First you need to think a little bigger about what a disability may be. We all know getting hit by a bus would count, but did you know anxiety, depression, and in some cases pregnancy could be cause for disability income to kick in and help avoid a financial stress? Among certain demographics these are actually the biggest reasons for claims on disability income policies.
How much does it cost?
Much less than you probably think. It tends to be sort of "out of sight, out of mind", but when people do think of it they often overestimate the cost by as much as double. For example, a 35 year old can get a policy that pays $3,000 a month for $30-$50 dollars a month. Of course, like all insurance there are a lot of variables to take into account to get an actual quote, but that gives you a sense of how affordable it can be.
How do I get it?
Well, there are basically two ways to get it. The first, and most common, way is to get it through your employer. When an employer offers it on a group plan the monthly premiums are usually cheaper, sometimes as much as 25% less than an individual policy. So, if that's an option for you I would recommend it. However, only about 1/3 of employees have access to a group plan. If it isn't offered through work or you're self employed individual policies are available through local agents, and are still very affordable.
Hopefully this helps shine a little light on a very important type of insurance that happens to get overlooked. If your employer doesn't offer disability income insurance have a discussion with them. It may just be they've never considered it. We can set up your employer to offer it, or help you get the best rate on an individual policy. Call us or email for more information.
Why do I need it?