When you think of your assets, you probably think of tangible things like your home, car and retirement account. But, what about your ability to earn a living? At Symmetry Financial Group, we believe one of your biggest assets isn't anything you can touch or feel; it's your ability to work. If you're like a majority of Americans, it would be difficult, if not impossible, to continue meeting your monthly obligations if you were to become injured or ill and could no longer work.
Disability income insurance is a type of insurance product designed to help replace a major portion of your income if you were unable to work because of an illness or injury. For this reason, many people think of it as “paycheck protection.” Along with life insurance, disability insurance can offer the protection you need to ensure your family doesn’t lose their home or other valuable assets if the unthinkable happens.
Most people don't think they're at risk of becoming disabled, but according to the U.S. Social Security Administration, one in five Americans (56 million) are currently living with a physical or mental disability. Additionally, it's estimated that one in four of today's 20-year-olds will become disabled before reaching their retirement age.
Without a solid disability insurance plan, your family could be at a significant risk if something unexpected happened, especially if you contribute to monthly household bills or a mortgage (most American households rely on two incomes to pay the mortgage). Relying on Social Security Disability to protect you may not be enough: it's very difficult to qualify for Social Security Disability benefits. The Social Security Administration uses a strict definition of "disability" and requires that you be unable to work in any occupation you would otherwise be qualified for based on your education, job experience and training.
Disability insurance purchased through an insurance professional generally uses an "own occupation" definition of disability rather than the "any occupation" definition used by the Social Security Administration, so proving you have a disability is less burdensome.
Like any insurance policy, you will need to apply for coverage and make regular premium payments to keep your policy in force. Disability income insurance can be purchased as a stand-alone policy, or as an added endorsement on your life insurance policy.
In the event you were to become disabled, your policy would specify how long the "elimination period" would be before benefits begin. After that elimination period, if you were still disabled and unable to work, the policy would pay you the benefit amount specified in the policy, for the length of time specified in the policy.
Your monthly disability income insurance payments during periods of disability are designed to provide you with some supplemental income during the period you are unable to work. This can help you continue paying your mortgage and other bills.
One major benefit of disability insurance is the paycheck protection it offers if you become disabled. You can feel safe knowing that your family will be able to continue paying the rent or mortgage even if you are out of work. Additionally, having this insurance on hand can be useful even if you get disability through your employer.
When you purchase your own policy, you don’t have to worry about suddenly losing coverage if you leave your current employer and get a new job. And, as discussed above, buying a disability insurance policy can help you avoid the frustration and delays that can come with relying on Social Security Disability, only to find out that you are not actually disabled in the eyes of the Social Security Administration.
Purchasing a private disability income insurance policy, or adding disability coverage to a life insurance policy, is surprisingly affordable for most people. With the ability to choose from many carriers and products, you can tailor your policy to meet your budget and needs by adjusting the amount of coverage, the length of time payments would continue after a disability, the elimination period and other optional policy features and benefits.
Because disability insurance is a health insurance product designed to protect your income, the amount you will pay for coverage will be based on your health and lifestyle, as well as your occupation and income.
All insurance carriers and disability policies are a little different, but qualifying for coverage may be easier than you think. Normally, there is no requirement for a physical exam.
Your policy will explain how "disability" is defined, and whether there are any exclusions to coverage. In general, private disability income insurance policies say that you are considered "disabled" if you are no longer able to work in your current occupation because of your physical or mental condition.
The best time to buy disability insurance is now, while you're healthy. Don't wait until your next big bonus at work to purchase coverage; many policies can be customized to include cost-of-living adjustments, so your policy benefits will rise with your income over the years.
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