Need for Disability Insurance

Many people view disability insurance as a waste of money. They think that it is an insurance policy that they are better off not getting, after all, they have worker's comp, health insurance, and life insurance. However, you can get injured outside of work. There are ways to become disabled that are not covered by your work, health coverage, etc. A spill, an accident, etc. can dry out your savings and deflate your investments quickly, leaving your financial situation in trouble.

The following is a look at disability insurance, how it works, and what to do to get the right coverage for you.

First, you have to understand how it works. Disability only covers a portion of your income, anywhere from 40-70% of the total. This means that when you shop for your disability insurance you need to consider how much of your income you would have to have to get by.

Second, think about how long a disability may last, and thus, how long you would want to get coverage for. The insurance will cost more if it covers you for longer. Research shows that only about 10% of disability accidents leave you disabled longer than about two years. So, if you are a server, and break your leg, it should be healed, and you can go back to work within a year or two. The best insurance you can buy will cover you until Medicare and Social Security  kick in, which is at age 65.

Third, make sure that your policy stays affordable. In other words, when you sign the contract for coverage, make sure that the policy is not cancellable, and that the rate for the premium and amount of benefits is locked in. This means that unless you stop paying you get the coverage they promised for the price they promised.

Fourth, consider your occupation when you research policy payouts. Look for an income replacement option, that covers you for a certain level of your income regardless of what you do for a living.

Fifth, know what the rules are, and make sure that you sign up for a policy that you do not have to pay for once you become disabled. In other words, the premiums stop if you get disabled, but the coverage continues.

In addition to getting the right policy for you, you also want to look for ways to cut costs. The following are a few tips for making your disability insurance cost less.

If possible, get a unisex plan. Women usually pay higher premiums then men, so save yourself a lot if you are a woman by getting a non-gender specific plan.

See if there are any discounts for things like a clean medical history, non-smoking, etc. and ask for them.

Look for a policy with an elimination period. Sometimes, if you pay for the policy for six months or so before it kicks in, then your policy cost may drop significantly.

Avoid all the extras. It is better to be able to afford a basic policy than to have a fancy one for a few months, and then none at all.