Why Should You Get Disability Insurance
Below is a MRR and PLR article in category Finance -> subcategory Wealth Building.
Why You Should Consider Disability Insurance
Overview:
The American Council of Life Insurers reports that one-third of adults aged 35 to 65 will experience a disability lasting 90 days or more, and one in seven workers will face a disability lasting over five years. Can you afford to support your family without income for that long? Likely not. Many assume long-term disabilities stem from major accidents, but illnesses like heart disease or cancer are more common causes. According to the US Department of Housing and Urban Development, 46% of home foreclosures are due to income loss from disabilities.
Understanding Disability Insurance
Disability insurance provides financial support when an injury or illness prevents you from working. It typically replaces a portion of your income. Employers often offer group disability insurance covering 60% of your salary, but you can purchase additional coverage to cover up to 70% or 80%. If you fund the insurance yourself, the benefits are tax-free.
Employer-Provided Group Disability Insurance
Many medium to large businesses offer long-term disability insurance. Even if you're covered, consider a supplemental plan to increase your potential benefits. Group plans cover your regular salary but not bonuses, with a cap of $60,000 per year. Benefits may be reduced if you receive other compensations like social security. If you earn significant bonuses or have a six-figure salary, consider additional coverage.
Individual Disability Insurance
Self-employed individuals or those looking to supplement employer coverage can purchase individual disability insurance. This can cover higher salaries and bonuses.
Choosing and Purchasing Disability Insurance
Buying disability insurance can be complex and costly, akin to life insurance. Premiums depend on factors like age, gender, health, and desired coverage. Risky jobs might increase premiums.
Selecting the right insurance is crucial for maximizing benefits. Opt for policies with varying waiting periods; longer waits generally mean lower premiums. For faster benefits, within 30 days, expect to pay more.
Essential Policy Riders
When buying a policy, consider adding riders. The "own occupation coverage" rider is valuable, offering benefits if you can't perform your specific job. Though it may increase costs by up to 40%, it offers substantial protection if needed.
By understanding and selecting the right disability insurance, you can secure peace of mind and financial stability in case of unexpected life changes.
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