Disability Income - Consider An Insurance Policy
Disability income insurance is designed to replace one's income when they are no longer able to work due to an illness or injury. Estimates as to the number of Americans who will be disabled before retiring range from ten percent to as high as sixty percent, depending on the source. The 2004 Field Guide by the National Underwriter stated that for someone forty years old, the chances of becoming disabled for ninety days or more prior to age sixty-five are forty-three percent. While Social Security disability benefits and workmen's compensation may help to replace a portion of the lost salary in case of total disability, it's prudent to consider obtaining a disability income insurance policy if your income allows it.
Read some of the other articles on this website regarding Social Security disability benefits and think about how having to survive on those payments would affect your standard of living before you decide that you can't afford a disability policy. Disability income insurance can help keep your finances in order during difficult times. To say the least, the future is unpredictable. It's only prudent to do what we can to be prepared. Disability insurance policies are available that can replace from forty-five to eighty percent of your gross income, and if you pay the policy premiums with after-tax income, any payouts would be tax-free.
Since these policies can vary so much, it's a good idea to meet with a number of different agents and basically become your own expert on the various options available in the marketplace before making a decision. Disability income insurance is quite complicated, so before purchasing a policy it's important to go over the provisions, stipulations and exclusions carefully and make sure the insurance covers your specific needs. Different policies define the term 'disabled' and the terms 'short term disability' and 'long term disability' differently. Some will consider you disabled if you cannot perform your regular occupation. Others won't pay out unless you're unable to do any job for which you are deemed reasonably qualified.
Disability income insurance policies also vary in regards to the waiting period after the disability is incurred before benefits will be paid, and not all policies cover disabilities resulting from both illness and injury. Other questions to ask the agent include for how long benefits will be paid, how much you would receive monthly, whether or not partial benefits are paid for partial disability, exactly what types of injury or illness are excluded, what the financial rating of the issuer is, and whether the policy is renewable without having to have a new physical exam.