When we consider our most valuable assets, most of us think of physical things, such as our homes, cars, campers, etc. and so we insure these things. However, if you look at it from a different perspective, you realize that none of those things would be possible without your ability to earn income. The foundation of all of your assets is really your most important one: You.

Why You Need Disability Insurance

Disability insurance pays a portion of your income if you can’t work for an extended period of time due to illness or injury and is the best way to protect your home and family if you become disabled. Unfortunately, most people don’t believe that they will become disabled but here are some sobering statistics:

• A 35-year-old has a 50 % chance of becoming disabled for at least a 90-day before age 65.
• About 30 % of Americans ages 35-65 will suffer a disability lasting at least 90 days during their working careers.
• About one in seven people ages 35-65 can expect to become disabled for five years or longer.
• Nearly half (46%) of all foreclosures on conventional mortgages are caused by a disability vs. only 2% are caused by the homeowner’s death.

This last statistic demonstrates the sad truth that most Americans are better prepared financially to die than to become disabled, although the chances are at least three to five times greater of a disability occurring.

Despite these facts, some people think that they don’t need disability insurance because they have savings. However, if you saved 10% of your income each year only one year of being totally disabled could completely wipe out 10 years of savings. Others believe that they can rely on Social Security Disability Insurance to provide an income if they are disabled, but it only applies to people who have worked at least 10 years and the average payment is $722 per month. Furthermore, the strict criteria of the program results in only 35% of applicants actually qualifying to receive benefits.

The simple truth is that if you are involved in a labor intensive job, own your own business or rely on a paycheck for income, disability insurance is the only way to protect your home and family.

Types of Disability Insurance

There are two basic types of disability insurance: short term and long term. A short term policy typically replaces 60% to 70% of your base salary and the payout period is between a few months up to one year. There is often a short waiting period, usually 2 weeks, between the time you become disabled and the payments begin.

In contrast, long term disability insurance typically replaces 40% to 60% of your base salary. Benefits end when the disability ends but in cases where the disability continues, the benefits end after the number of years specified in the policy or at retirement age. The waiting period for benefit payments is typically 90 days from the start of the disability.

The challenge with disability insurance is that each insurance provider defines “disabled” differently. Also, some policies will pay benefits if you can’t work in any job that you could qualify for while others will pay if you can’t perform a job in your occupation. To make it more confusing, some policies pay for partial disability and others only pay if you can’t work at all.

How to Get Disability Insurance

There are four primary ways to obtain coverage:

• Sign up for employer-sponsored coverage at work. Most offer it and some pay part of the premiums. Unfortunately, depending on the level of coverage, you may want to supplement it with a personal policy.
• Buy disability insurance through the workplace. Even if coverage isn’t offered as part of your benefits package, you may still be able to purchase it through their company so you are more likely to get a group rate.
• Check with any professional organization that you belong to. Many of them offer members the ability to purchase this coverage at group rates.
• Purchase an individual disability insurance plan. Most of these providers only sell long-term disability plans but others do offer the short term option as well.

Your family relies on your income to pay rent or mortgage payments, purchase food, clothes and other necessities, and provide a good life for all of you. If that income is lost due to disability, you are likely to lose your home as well, and the lifestyle you and your family enjoy, which is why you need coverage.

Purchasing disability insurance is tricky. You need to decide how much coverage makes sense, should you buy a policy for short term insurance, long term insurance or both? Then you have to review the policies and evaluate which will give you the most benefits for the premium payment. Or you could contact us. At Alliance, we help thousands of people just like you select the best disability coverage for their needs. Since we represent the best insurance companies in the state, we can offer you options that you can trust.