Most of us understand the need for insurance for our health, home and car. But what about insurance if injury or illness would take away your ability to bring home a paycheck?
Disability insurance, also known as disability income insurance, replaces a portion of your income if you’re unable to work. And it can give you the time you need to recover or make other arrangements.
It may be hard to think about being unable to work when you’re in good health. But the chances that you’ll miss work due to a long-term or permanent illness or injury are greater than you may realize. Just
We’ll review some of the common questions that people ask when determining if disability insurance is right for them:
What happens if I don't have disability insurance?
Simply, you put your financial stability at risk. You’ll have to find a way to cover your financial obligations without a paycheck.
While you may have personal savings to draw on in an emergency, how long would your
Is my employer group disability insurance coverage enough?
On average, group long-term disability income coverage can replace around 60% of your income—before taxes. If your employer covers the premium, the benefits you receive may be taxable, which lowers the amount you would receive. This can leave a significant gap between your pre-and post-disability income.
So, while employer coverage can recoup some of the funds you need to cover your financial obligations, adding
In addition, an individual contract is portable, meaning if you lose your job or change jobs, you won’t have to worry about losing coverage. And, if you pay your premiums with after-tax dollars, benefits may be income-tax-free.
Is disability insurance expensive?
Disability income insurance may be cheaper than you think. Typically, the average annual premium is 1% to 4% of your adjusted gross income.*
Does Social Security cover disability benefits?
Social Security disability insurance, also known as SSDI, is a program that can provide benefits to people who meet the definition of disability under the Social Security Act. You must qualify for the benefits, which can be paid to the disabled person and their dependents. Many applications for Social Security disability benefits are denied at first, and it could take up to two or three years to complete an appeal.
The average monthly
What does disability insurance cover?
Disability insurance covers serious health conditions and long-term illnesses as well as accidental injuries. If something is excluded from coverage, such as pre-existing conditions or certain occupations or situations, it will be detailed in your contract.
At the time of purchase of an individual contract, you can designate how long you want benefits paid: 12 months, 24 months, 60 months, 10 years or age 67. You also can determine if you want your contract to pay out a portion of benefits if you’re partially disabled.
Will I qualify for disability insurance?
If you are healthy, you would likely be qualified to purchase disability insurance. However, some pre-existing health conditions may impact your ability to qualify.
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