Do You Need Disability Insurance?

DisabilityOne of the most overlooked insurances and one of the first questions I always ask someone who comes to me for help is do you have disability insurance?

The answer hopefully is yes, because you need disability insurance if you work.

Without this coverage you could be setting yourself for a big gap in your overall financial plan. Even if you work part time this coverage is important to keep.

So why don’t you think it is important?

You think it will never happen to you. I’m right there with you. The Census Bureau has found that nearly

20% of workers become disabled throughout their working careers.

I’ll be the first to admit I think I’m part of the 20%. That is until I realize the financial devastation that could take place without coverage. Why take that chance?

There you are young, old, many years still to come in your working career. You make $100,000 and you become disabled. No coverage means you find a job that you can do, or qualify and live off Social Security Disability Income. Those are your options. Make $25,000 at some minimum wage job or pray you qualify for SSDI.

If you have coverage, it will hopefully be around the max which is 66% of your income. Meaning you would have around $66,000 knowing you do not have to worry about finding a new job or qualifying for SSDI.

You probably don’t understand how difficult it is too qualify for SSDI. Try 4.6% (according to SSA.gov). 4.6% of the US population is currently collecting it. To that, I say good luck …

So if you really want to take a 20% chance on that, it’s totally on you.

What kind of lifestyle change would that look like for your situation? As if becoming disabled wasn’t bad enough remember to think about your lifestyle and goals. All that out the window if you aren’t covered.

So do you need disability insurance? Yes, but for how much? The insurance companies will not insure you for anything more than 2/3rds of your income. The general rule being that you want the max allowable coverage. Could you live on less than 50% of your income?

If you answered yes, then kudos to you because many people including myself cannot. The max allowable is going to help close the gap. The insurance companies only cover this much so that you can have “skin in the game.” They want to make sure you go back to work if you can.

If you aren’t convinced by now, there is one saving grace; Coverage through work. Most people are covered, self employeds are the exception and you should double check through work to make sure you are. There is a limit or even a formula for how much of your salary is covered should you become disabled. Most likely a good thing to know especially if there is any gap.

Not having disability insurance could ruin not only your working career but your finances. Yes, you will likeyneed disability insurance. So why not ask me how to get it?

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