You know those duck commercials? You’re almost certainly seen them dozens, maybe hundreds of times. Do you know what that duck is trying to sell you?
The answer is disability insurance, which is a kind of insurance that you probably don’t think of as often as auto, health, home, or life insurance. It is something that you should consider though, because if you do become disabled due to accident or illness and you can’t work, your income ceases. Even if you have savings, it’s not always accessible in the case of an emergency and things can quickly spiral out of control.
Just a note, some sources say that statistically people 35-65 are twice as likely to be disabled for three months or longer than they are to die during that age range.
Some jobs offer long-term disability insurance to their employees, but many don’t offer anything. If you’re in a situation where you have long-term disability insurance, you still might want to consider short-term disability insurance to supplement. You should talk to your company, most HR personnel should be able to give you an overview of what kinds of coverage that they offer.
Here are some points when considering disability insurance:
- First, ask what the definition of “disability” is. Some policies say that you’re disabled if you can’t work in your “own occupation” and some policies say that you’re only considered disabled if you can’t work in “any occupation.” Obviously that second definition is a trap, because some occupations might be able to be performed by a quadriplegic using his mouth to type on a computer keyboard.
- Second, look at the duration of the policy period. Ideally, the policy should cover disabilities until you’re eligible for Social Security and Medicare.
- Third, ask yourself what you really need. You aren’t going to need your exact salary during your period of disability. If you’re not working, you shouldn’t have to worry as much about some expenses. Either add up your rent and food and other ongoing expenses, or take what you currently make and subtract things that would be extraneous during a period where you are on disability.
- Fourth, what can you afford? Disability insurance isn’t cheap, so be careful when you’re looking at plans. There are some options that can boost premiums a lot, but make sure that you’ll still be covered by things like sick leave and savings if you decide to cut corners.
Disability insurance is something that requires planning ahead, and remember that you can’t plan out when you’re going to have an accident or a serious illness. If you’re a position where you support other people, you definitely want to protect them.
We’re not insurance agents but if you’re curious how disability insurance fits into your life we can help you plan a solid financial protection package.