Last week I gave suggestions for drafting up a will and today I’m going to help you decide whether or not you need disability insurance.
Disability insurance is a type of insurance that doesn’t get much thought. Some people have it with their jobs and are paying into Social Security (which would pay for a disability) and think that is enough.
However, not having the correct amount of disability insurance could put your family’s financial security in jeopardy.
Disability insurance is there to replace part of your salary if you get sick, hurt or are unable to work for an extended period of time.
Statistics show that at age 30, you have a 1 in 5 chance of becoming disabled for a year or more. Not having enough disability insurance during an extended illness can cause great financial hardship to a family especially if you don’t have enough money in your emergency savings account to cover the bills.
If you and your spouse are both working and not dependent on both salaries to meet the monthly expenses, then you may not need disability insurance. If one spouse gets hurt, you have the other spouse’s salary to rely on to pay the bills.
Also, if you are struggling to get by with the bills now, then purchasing disability insurance should be on the back burner for now. Once your financial situation stabilizes, then look into it. No sense adding to the burden with another monthly payment.
What about Social Security benefits? They are VERY difficult to qualify for and if you do qualify, the amount is very small compared to what you were used to getting paid. Although any amount received from Social Security will help, please don’t count on this benefit coming to your rescue.
Check with your employer to see if you have short or long-term disability insurance. If the amount they are offering is not enough to meet your household needs, consider purchasing additional insurance through your employer. It is usually cheaper to purchase it through their group plan than purchasing it on your own.
If you don’t have coverage through your employer, shop around to find the right policy for you. Start your research with your homeowners and life insurance companies and go from there.
I know this isn’t a feel good topic, but it is one that needs to be addressed. Disability is the leading cause of bankruptcy and foreclosure and if you are able to afford it, obtaining it can give you peace of mind just in case the inevitable happens.
Do you currently have Disability Insurance? If not, are you planning on getting it? If you do have it, is it through your employer or did you obtain it on your own? Let me know in the comments below.
Be sure to stop by next Tuesday. Teaching Kids to be Financially Responsible will be the topic of the day. Until then…
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