Should I get a disability insurance even without disabilities? There is no direct answer for this question as it depends on you and what you want. Of course you can get a disability insurance even without disabilities, but this insurance will only come in handy should you begin to exhibit any disabilities. If cause any body can get a disability insurance but the question is do you want it, what are the procedures to get one, what are the advantages of having a disability insurance.
However, in this article we will be going through the following points to help answer the question “should I get disability insurance even without disabilities?”
- Meaning and definition of disability insurance
- Difference between long-term and short-term disability insurance
- Who needs disability insurance?
- Why do I need disability insurance? How much disability insurance do I need?
- What is Social security disability insurance?
- What will it cost to get a disability insurance?
Meaning and Definition of Disability Insurance
We can not jump into answering the question, “should I get disability insurance even without disabilities” without first knowing the meaning of disability insurance well as what it means to have one.
in exchange for regular premium payments, disability insurance commits to paying out a portion of your salary in the event of a disabling condition. “If you’re too sick or hurt to work, it replaces part of your income,” says Jeremy Straub, the Fort Lauderdale, Florida-based CEO of financial services firm Coastal Wealth.
Difference between Long-Term and Short-Term Disability Insurance
Typically disability insurance is offered in two categories: short-term and long-term. Depending on the policy, short-term disability insurance replaces a predetermined percentage of your pay-typically in the 50% to 60% rage- for up to a few months if you’re, say, laid up with a broken leg.
Long-term disability insurance will partially replace lost income for longer durations in the event of an injury, illness or other malady that bars you from working. Typically, long-term disability coverage has a lengthier elimination period,” or waiting period between when you cease working and start collecting benefits. This can last up six months or longer, so it’s important to have an emergency fund on hand to cover months of unpaid time before your benefits start coming through.
The exact details of your disability insurance policy will be determined by the conditions of the plan and dictated by your premium, the established definition of “disability” and other factors. For an extra cost, workers can also add riders, which may pay student loan balances, replace retirement contributions or increase the amount paid out as the recipient ages.
Who Needs Disability Insurance?
To answer the question “should I get a disability insurance even without disabilities”, it is important that we first get to know the group or category of people who needs disability insurance, as well as what you need to know in order to determine if you need a disability insurance. The people who typically buy disability insurance are working professionals who would need to replace income in the event of disability, Straub says. “The people who probably need it the most are people who don’t have a good amount of savings, he says. But that population often can’t afford the monthly premiums. Business owners should also consider disability insurance, he says.
It’s worth discussing disability insurance with your financial advisor as part of a holistic financial plan. Says Dostal: “It becomes the question of the cost of insurance versus you needing those dollars for retirement savings or whatever else. It’s all about structuring that balance.”
Why Do I Need Disability Insurance?
It is important to know the reasons why you may need a disability insurance in your place of work before you can be able to determine or make the choice on the subject should I get a disability insurance even without disabilities. Your employer may offer disability insurance, but investigate its coverage limits and tax implications. Many workers spend years nurturing their ability to earn a paycheck.
They complete specialized training programs, negotiate salary and score promotions. They take night classes, work overtime and find ways to make themselves indispensable to their employer.
So what would happen if they lost the ability to earn that paycheck tomorrow? What if an illness disrupted their ability to work for three months? What if a serious accident prevented them from ever working again? Would they be able to pay their mortgage? Would their kids still have a college savings account? Would they be able to retire?
“Your ability to earn an income is your greatest asset, and if you don’t cover that, all of those other plans are at risk,” says Kamilah Williams-Kemp, vice president for new business at Northwestern Mutual.
Many people don’t like to envision a life in which they become disabled and are unable to work, but there’s evidence that they should consider their options. More than 1 in 4 of today’s 20-year-olds will become disabled before reaching age 67, according to a fact sheet from the Social Security Administration.
For many of those workers, the presence of a solid disability plan could spell the difference between maintaining their standard of living or diving into financial insecurity. But purchasing disability insurance isn’t always baked into our consumer habits, like buying auto insurance, life insurance or homeowners insurance, and some workers might assume that their workplace insurance or Social Security disability insurance will protect them if things get bad enough. Unfortunately, it’s not that simple.
How Much Disability Insurance Do I Need?
The first step in determining your disability insurance needs is to run through your regular expenses and financial habits. Ask yourself, “If I stopped getting a paycheck tomorrow, what do I absolutely need to keep the lights on?” Dostal says.
Consider your costs for mortgage payments, food, utilities and basic savings goals such as the kids’ college fund. Does your spouse work, and would he or she be able to pick up the slack if you couldn’t contribute financially? Once you’ve determined your cost of living, review your employer insurance to determine whether it covers enough.
If you don’t have enough coverage, Straub says, you have three options. You can take the risk and hope you never get sick, injured or become unable to work. You can self-insure, which means setting aside enough in savings that you’d stay afloat, even without a paycheck. Or you can transfer the risk to an insurance company.
What Is Social Security Disability Insurance?
In general, the most restrictive definition of disability is the one for Social Security disability insurance, which all working Americans are eligible for if their condition qualifies. To receive SSDI, you must suffer from a mental or physical disability that prevents you from engaging in work for at least 12 months and meet a host of other qualifying criteria. It’s a high bar to reach for many people.
What will it Cost to get a Disability Insurance?
The cost for disability insurance varies, depending on whether it’s subsidized by your employer, the definition of disability, the elimination period, your age and health and other factors. Workers who seek disability insurance on the private market will have to pass the insurer’s underwriting requirements, which may consider health history, age, riskiness of occupation, hobbies and other factors.
If you’re looking at the basic elements that define your premiums, Straub recommends considering these five factors:
Occupation: The riskier your occupation, the more expensive your plan will be. Unfortunately, this is not an easy factor to adjust.
Age: The older you are, the more you will pay. Again, this is not adjustable, and don’t try lying.
The waiting period: The longer you wait before collecting your disability insurance, the cheaper the plan will be. If you can stretch this out and cover the waiting period. with a robust emergency fund, it’s worth tweaking for lower premiums.
The actual dollar amount you would receive: The more you’d collect each month if disabled, the more you’ll pay in premiums.
The duration of your insurance coverage: The longer the plan, the more you pay Disability insurance plans can cover you up to retirement age.
To summarize, we have seen that anybody even without disabilities can get a disability insurance. Therefore, to answer the question, “should I get a disability insurance even without disabilities, well that depends on your own personal opinion, you have to first consider the price, if it’s something you can afford then you have to consider how important it may be to you that you get one.