There’s a reason so many people invest in insurance policies. No one wants to use them, but there’s peace of mind in knowing it’s there.
And if you ever need to use your policy, it’s a barrier between your personal finances and the problem at hand.
This is particularly true with disability insurance. You can make a payment plan for your doctor’s visits or the mechanic, but you can’t do any of that without an income. Disability insurance kicks in and provides a paycheck when you can’t work.
So how exactly does a disability policy protect your income? Here are four ways it may save you in an emergency and why you need to immediately invest in this type of coverage.
1. Your Main Bills Are Covered
Most Americans still live paycheck-to-paycheck. If they were to get sick or injured enough to miss more than a week or two of work, the results could be devastating.
Short-term disability policies help out when you’re unable to provide for your family while you recover. These policies usually pay 60-70% of your normal income, depending on the coverage you have.
It may not be your entire paycheck, but it should be enough to cover your main bills and put food on the table.
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2. You Have More Money to Help You Recover
Whether you’re working in an office job or you’re a physician, you can get sick or hurt. Even if you do have a nest egg, you don’t want to break into it to cover your home and medical bills.
With disability insurance, you still have a partial income coming in while you’re recovering. Knowing your bills are covered helps you focus on healing instead of rushing back to work before your body is ready.
Injuries and illnesses take time to heal. A broken bone may keep you out of work for months. A serious illness, like heart disease or cancer, might take even longer to recover from.
While you’re out, you’ll be accruing medical bills and paying for medications and treatments. If you have to choose between your household expenses and your doctor’s visits, it’s an extremely stressful situation. The money you get from your disability policy can prevent you from having to pick.
3. Getting Benefits May Be Easier Than You Think
Disability insurance companies have their own definitions of what a disability includes. If your policy has a “true-own” definition, the criteria you’ll need to meet to be “disabled” might be easier than you realize.
“True own-occupation” is the definition used by most companies. If you fall into this category, you can collect your disability benefits if your injury or illness keeps you from engaging in any aspect of your current job.
Here’s an example of a true own-occupation scenario. As a doctor, you could still see patients in the office. But because your disability prevents you from performing surgeries, you can collect benefits.
The other definition is “any-occupation.” In this category, you must prove that your disability prevents you from doing any work in any job.
Take our previous surgeon with a disability. With an “any occupation” definition, the individual must prove that they can’t do any work whatsoever. This includes something unrelated to their original career, like working as a cashier in a grocery store.
If your policy has the “any-occupation” terminology, you should look into getting coverage with a different reputable insurer. That way, should you ever need the benefits, they’ll be easier to access.
4. You Can Add More Coverage
If 60% of your income isn’t enough to safely see you through a few months out of work, look for an insurer that lets you add supplemental coverage.
The extra coverage helps make up for the 40% of your income that the initial benefits don’t pay with this additional policy. It’s worth the extra money for people who don’t have a lot of cushion between their monthly income and debt.
A disability insurance policy premium varies, but it’s usually around 1-3% of your annual income. Someone who makes $100,000 per year would therefore pay close to $150-$200 each month for their coverage. Supplemental insurance as an add-on would be a small fee on top of the base rate.
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We all want to believe that we’re indestructible. The reality is that it’s extremely easy to become so injured or sick that we can’t take care of our families.
Before this happens to you, protect your loved ones and your assets by investing in disability insurance coverage.