Today, let’s talk about whether it’s essential to get disability insurance. I remember going to a conference last year where the main aim was to motivate everyone to keep pushing toward their goals. Interestingly, the last keynote speaker shared her story instead of giving a standard pep talk. She used to be a workaholic, but her life changed completely after she had a brain aneurysm at the gym, which kept her away from work for a year. Her experience made her grateful for having disability insurance, and it got me thinking if I should consider getting it too.
So, what exactly is disability insurance? Often called DI, this type of insurance helps protect your income if you become disabled and can’t work. Simply put, we can’t predict if we’ll ever become disabled, whether temporarily or permanently. During such times, the last thing anyone needs is to worry about losing income and paying bills. Disability insurance can cover a significant portion of your salary, giving you a financial safety net. Typically, DI costs between 1% and 3% of your total salary, depending on factors like age and coverage needed, and it can replace about 60% to 80% of your pre-tax income.
If you’re wondering if you need disability insurance, consider these four points:
1. **The Possibility of Disability:** No one likes to think about losing their abilities, but it’s always a possibility. About 25% of workers experience a disability lasting more than three months at some point in their career. Even a temporary disability can mess up your finances, and if you have a family history of disabilities, your risk could be higher.
2. **Your Role as a Provider:** If you’re the main earner in your household, like I am, disability insurance is worth considering. Many of us rely on our physical and mental abilities to work, and an unexpected illness or injury can lead to a financial crisis. Did you know 62% of all U.S. bankruptcies and over half of all mortgage foreclosures happen because of illness or injury-related expenses?
3. **Your Professional Hazards:** Jobs like doctors, nurses, and contractors come with higher risks of injury or illness. While some employers might offer help if something happens on the job, depending solely on that can be risky. Employers might not always cover your medical bills or provide adequate workers’ compensation, as happened with a family friend of mine.
4. **Your Financial Capabilities:** With many bills already straining your budget, adding another insurance expense might seem tough, even if it’s necessary. Start by looking at your budget to see what you can afford. You can always start with lesser coverage and increase it later on.
In conclusion, disability insurance is something worth discussing. While planning for future successes is important, preparing for unexpected challenges is equally crucial. Whether you need DI depends on your age, career, income, and family situation. Start by getting quotes from providers and understanding the coverage they offer.