Most of us are aware of the need for medical coverage, but we often
neglect
disability when determining our insurance needs. Disability insurance helps
replace income lost because of an accident or illness. Few of us would have
an adequate war chest for an extended battle with a loss of
income.
Unfortunately, many of us will need disability income
protection some time
before we die. For people aged 45, two out of five will be disabled for more
than 90 days before they reach age 65.¹ Without disability insurance
protection, a disability could spell financial disaster.
Disability
at any age can disrupt income while medical expenses deplete your
savings. Unless you have a battle plan, the effects of even a short-term
disability can be financially and emotionally
devastating.
Disability
Protection
Disability
insurance provides a financial safety net. In the event you
experience a disability, the benefits provided by disability insurance
effectively replace a portion of your earned income. Disability coverage can
prove to be invaluable. And in many cases, disability insurance should be
considered before taking steps to achieve other financial
goals.
Designing a Disability Protection
Plan
Appropriate
disability coverage depends on your particular situation.
However, there are a few issues you may want to consider.
First,
consider carrying enough coverage to replace at least 60 percent of
your earnings. Many companies limit benefits to between 50 percent and 80
percent from all sources of disability income prior to the disability. This
would mean, for example, that the amount of any Social Security disability
payments you receive would be deducted from your benefit amount. Remember,
private disability benefits are usually tax-free.
Consider
extending the time between when the disability occurs and when you
start receiving benefits. Choosing a 90- or 180-day waiting period instead
of a 30-day waiting period can lower your cost substantially.
Be
sure to compare and review policy benefits carefully. Disability
insurance can be an affordable alternative an alternative many people cant
afford to be without.
© 2003 Emerald
Publications
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Source:
¹ 2002 Field Guide,
National Underwriter Company, 2002
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