Why You Should Consider Disability Insurance

The thought of becoming disabled and unable to work may not be top of mind, but would you be financially prepared if it happened to you? According to the Centers for Disease Control and Prevention (CDC), 26 percent (one in four) of adults in the United States have some disability. Your chances of becoming disabled are far greater than your chances of dying, and as you age, the likelihood of having an injury that results in permanent disability increases.

Often, people think that Social Security Disability Insurance (SSDI) would replace their income if they become disabled. SSDI is a social insurance program under which workers earn benefits coverage by working and paying Social Security taxes on their earnings. The program provides benefits to disabled workers and their dependents. However, SSDI will only pay part of your lost wages if you become permanently disabled.

So how do you offset the risk of lost wages if you become disabled and can’t work? One way is to purchase a disability insurance policy to help protect against lost wages. Here are other things to consider before buying disability insurance:

  • Disability Insurance provides insurance for lost wages until retirement age. 
  • Policies are designed to payout a percentage of lost wages, usually 60-75%, until retirement age, when social security benefits begin. 
  • When applying for disability insurance, your profession and current wages are considered in the underwriting process.
  • Today’s disability policies are required to have an adjustment for inflation as the policy stays in force. This adjustment helps determine that your payout if you become disabled, has kept up with inflation and the wage you would have received if you continued to work.   
  • Your yearly disability policy premium may also change because the likelihood of injury in certain professions increases as you age.
  • During underwriting, you decide when you want benefits to start. The specific start date is 90-180 days after injury, which is also a determination period of if your injury will be permanent or not. 
  • Your medical provider and treatment plan also determine if the injury results in partial or permanent disability and if you will receive the total or partial monthly benefit.

Talk to us today

To understand disability insurance and discuss if purchasing a disability insurance policy is appropriate for your situation, visit with your financial professional. Contact us today!

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