Truth be told, nobody likes to think about disability insurance or how different life is as a disabled person with out any income coming in and how your life can change in a blink of an eye. Why do people not think of this type of disability insurance until after the fact.
Here is why you need disability insurance:
One in seven workers will be disabled for more than five years, and while many people think that disabilities are typically caused by major accidents, the majority of long-term absences are actually due to illnesses, such as cancer and heart disease. The loss of income can be so devastating that it forces some people to foreclose on their home or even declare bankruptcy.
As stated by Stacey L. Bradford, the author of ‘Do You Need Disability Insurance?’, “Individual disability insurance is truly a basic concept. It is an insurance product designed to replace anywhere from 45-60% of your gross income on a tax-free basis should a sickness or illness prevent you from earning an income in your occupation.
Every disability insurance policy from every insurance company is very different; this is not a product to simply shop for the most competitive rate. To buy the cheapest disability insurance policy on the market is to throw money away. The odds of getting paid a monthly benefit under a cheap contract may be significantly lower than receiving benefits from a quality contract.”
I totally agree with this and although most people say, “I don’t need disability insurance – I’ve already got it through work,” there are a lot of advantages for applying for a disability insurance while young and healthy. I think one of the most common mistakes that people make is waiting too long to apply for disability insurance.
Stacey adds that, “Long term disability policies vary greatly. While some are iron-clad and pay benefits when you need them, others have more holes than a pasta strainer.
Why you should get disability insurance that covers your needs today:
Folks trying to save some money with a leaner plan may find it ultimately worthless. Typically, the cheaper plans have very strict definitions of disability, making it difficult to claim benefits over many years, warns Frank Darras, a disability insurance attorney with Claremont, Calif.-based law firm Shernoff Bidart & Darras. Sadly, this is also true of some group plans.”
It is hence important that you carefully look at the conditions and know what you are signing up for. If you ask any financial planner or insurance agent what risk could be called “the forgotten risk,” chances are the answer will be disability. In reality, disability insurance is as important as (and in some cases, even more important than) life insurance.
Suffering a disability can be a very great catastrophic event for you, your family, your friends and your co-workers. In addition it would create enormous emotional pressures for the family because your role would change and you would have physical needs to be met.
There would be enormous financial pressures that would exacerbate those emotional pressures. You would witness firsthand the impact that your disability planning – good or bad – would have on you and your family. It is therefore important that you make the right decision and get good disability insurance coverage.