Imagine not being able to work for a couple of months. How will you pay for essential costs such as; rent, mortgage, car loans, or groceries? Do you have an emergency fund or insurance in place?
This scenario is more common than you would think. According to Social Security Administration, one out of four of all 20-year-olds will become disabled and unable to work sometime before reaching 67. This makes it essential to consider what income loss means for you and your family. You can avoid the financial stress you would endure with disability insurance. It will give you peace of mind knowing that you and your family would be okay financially if you couldn’t work for a while. Protect Paycheck with Disability Planning.
There are three ways to get disability benefits.
- State Disability: Some states offer disability benefits to replace a portion of your income if you can’t work for some time. Click to see what’s offered where you reside.
- Disability Insurance: Set up an insurance policy to control how much and how long your income will be replaced. Click here for a quote.
- Social Security: Supplemental Security Income (SSI) is a Federal income supplement program for individuals that have been disabled for over 12 months and considered a permanent disability: Click to learn how much you may qualify for.
What is Disability insurance?
Disability insurance covers a percentage of your income if something happens to you (like an illness or injury) and you can’t work. Many people are unaware that disability insurance can be used for more than just disabilities. Struggling with mental health, severe migraines, back pain, pregnancy, cancer, or surgery are all illnesses and injuries that can be covered with disability insurance. If you need to step out of the office for a while, you don’t have to worry about finding a way to protect your bills. Most disability insurances cover about 70% of your income for a certain amount of time.
Is Disability Coverage through work enough?
You might think, “I’m covered.” “I have disability insurance through my work.” However, these types of insurance coverage are likely not enough to survive financially, and sometimes they don’t even cover injuries or illnesses that developed outside work. Remember that your coverage ends if you have disability insurance through work and switch jobs or fields. Check with your employer to see how much your disability insurance covers and what it covers if you can’t work for a while.
What types of disability insurance exist?
Long-term disability benefits are paid out for the number of years indicated in the plan. There are long-term disability plans that pay out partial wage replacement benefits until a certain age, such as 65 years old.
- 40-70% of your salary
- 5+ year
- Costs around 1-3% of your yearly income
- It has a 3 – 6 month elimination period
Short term disability
Short-term disability typically pays out a portion of an employee’s income from 9 to 52 weeks, depending on the plan. “elimination” period is usually set from seven to 14 days. Only get this type of disability insurance if your employer offers you free.
- 60-70 % of your salary
- 3 to 6 months
- Costs around 1-3% of your yearly income
- It has a 14 days elimination period
How much disability insurance do you need?
Try out this formula to calculate how much you need.
Remember that the younger you are, the cheaper your premiums will be.
How much does disability insurance cost?
Disability insurance costs for short-term and long-term coverage are most likely between 1% to 3% of your annual income. For example, if you make $50,000 a year, that’s $60 – $125 monthly. You’ll pay less if you get a long-term policy with a more extended elimination period.
Who Needs Disability Insurance?
It is wise to have long-term disability insurance regardless of your type of job. Not everyone needs disability insurance, but disability planning is crucial to ensuring a stable lifestyle for you and your loved ones while working. Your planning should give you peace of mind. Knowing that your financial stability would stay intact if your income were to stop due to an injury or illness.
What Disability Insurance doesn’t cover:
Disability insurance is designed to replace a portion of your income. it doesn’t cover extra expenses such as; medical bills and extended or term care costs.
Long-term policies don’t usually cover pregnancy. However, the complications that extend beyond pregnancy (if a doctor orders you to stay at home after a C-section) could qualify you for benefits, but only if you had a long-term policy in place before you got pregnant.
Short-term policies cover birth as a disability, but you might be waiting long, six-to-eight weeks for each check.
How do I get disability insurance?
- On your own through with the help of an Insurance Agency. One of the best ways to get disability insurance. It lets you get the exact amount of coverage you need and compare coverage and prices from various insurance companies. You don’t need to worry about losing coverage if you change jobs or leave a particular professional organization. You can work with a licensed policy engineer to get the best coverage and price for your needs.
- Through a specific industry professional organization
– Many professional organizations for people in a specific industry offer the option to buy insurance through a group plan.
– It’s easier to qualify for coverage and less expensive than buying disability insurance on your own.
-The professional organization may choose to stop offering the coverage at any time.
– You would lose coverage if you change professions or leave the professional organization industry.
- Through your employer:
-Typically, the coverage is automatic.
-There’s often no premium for you to pay.
-You lose coverage if you leave or are terminated from your job.
– Coverage limitation. Most likely not enough to be okay financially.
- Through the government
Workers’ Compensation Every state has its own Workers’ Compensation laws. It only covers work-related injuries and illnesses and may not be enough to cover your lost income.
Social Security Disability Insurance Qualifying isn’t easy. Around 65% of the applications were initially denied. The average payment (in 2020) was only $1,258.
State disability insurance programs are Only in 5 states. It covers only a portion of your income for about 4 to 6 months.
Ready to protect your Paycheck?
Disability planning needs depend on each individual’s income and job duties. That’s why our licensed Policy Engineers take an in-depth look at your situation to determine your actual disability income needs. You can do all this online from the comfort of your home. Protect Paycheck with Disability insurance. Get a free disability income evaluation today!
What’s the average length of a disability?
More than one in four of today’s 20-year-olds can expect to be out of work for at least a year because of a disabling condition before they reach the full retirement age of 67.
Don’t get caught with empty pockets.
Almost half of the American adults indicate they can’t pay an unexpected $400 bill without taking out a loan or selling something to do so.
Don’t follow the herd.
At least 51 million working adults in the United States are without disability insurance other than the basic coverage available through Social Security.
Three months go by in the blink of an eye.
Only 48 percent of American adults indicate they have enough savings to cover three months of living expenses if they’re not earning any income.