When you think about it, the greatest financial asset you have is your ability to earn an income. Most of us count on a regular paycheck to provide for our family and to meet our financial obligations. But what if you suddenly found yourself in a situation where you couldn’t work as a result of disability? That’s where disability insurance comes in. Learn more about the different short term, long term, and standard disability insurance types and get cheap and affordable quotes with low rates from best insurance companies for term, whole, universal, and variable universal products.
Do I need disability insurance?
Basically, if you rely on your regular monthly paycheck to cover your expenses and meet the needs of your family you should seriously consider disability insurance in case you find yourself disabled and unable to earn an income for any extended period of time.
What income protection support is available to me through disability insurance?
If you find yourself in a position where you are disabled there are several potential options for disability benefits for which you may qualify. The government offers disability benefits that may help to offset lost income but that’s only if the circumstances are right and you qualify. In the event that you do, the amount you’ll receive will almost certainly not be enough to replace your income entirely which is why obtaining disability insurance will help to protect your most valuable asset—your ability to earn an income and provide for you and your family.
What are other sources of disability benefits?
The government offers several sources of disability benefits that you should be aware of. Additionally, many employers sponsor disability coverage. Below is a list of these options and a brief explanation.
If you’re employed and you develop a disabling illness or suffer an injury you may qualify for Workers’ Compensation insurance. Each state requires employers to provide coverage and you should expect to receive approximately two-thirds of your income. The catch is that you only qualify in cases where the disabling illness or injury is related to your work and the vast majority of long-term disability instances are not work-related.
State Disability Insurance Programs:
There are several states that maintain short-term disability insurance programs which provide up to six months’ of benefits. The states that offer this type of insurance are: California, Hawaii, New Jersey, New York and Rhode Island, as well as Puerto Rico. While this coverage may help in the near term, there still is the question of replacing lost income on an ongoing basis.
The federal government offers a disability coverage program but qualifying for benefits is a real challenge (nearly 60% of applications are denied initially). If you do qualify, the benefits you’ll receive will likely be just a portion of your previous income. The average monthly payment to beneficiaries is $1,063.
The vast majority of income protection comes from insurance coverage sponsored by employers. Many companies, especially larger ones, offer their employees group disability insurance coverage. Those companies that don’t may offer employees the ability to purchase coverage on a voluntary basis.
There are two forms of coverage – short-term disability (STD) and long-term disability. The former replaces a significant portion of your income for about three months. The latter form provides approximately 40% - 60% of your income for longer periods of time.
Individual Disability Insurance:
Obtaining an individual disability insurance policy will provide you with the greatest flexibility and allows you to be confident that you have a solution in place to protect a significant portion of your income. Additionally, a privately owned policy is policy is portable so you will be able to retain coverage even if you change jobs. Most plan options will pay between 40% and 65% of your pre-disability income.