YOU ASK:

Do I need disability insurance?

WE ANSWER:

To help you answer this question, you should make a thorough evaluation of your present and future financial standing, as well as the probability of you getting into an accident or contracting a serious illness that renders you disabled.

Disability insurance is similar to life insurance in that it provides a level of protection for incomes you may have in the future. With life insurance, you assure your beneficiaries with an amount to help them cope with your loss as the breadwinner. With disability insurance, you are assured of a certain level of income in the event that you become disabled due to an accident or to an illness.

Some people would rather save the supposed premiums into an account to use in case one is disabled while others prefer the security of having a disability insurance plan providing the coverage. It's really up to you to decide whether buying disability insurance is a wise choice.

Here are some points you should consider:

  • Premiums vs. Possibility of disablement. If you are disabled, having disability insurance will be a big help in ensuring that you and your family are provided for even if you are unable to earn an income. However, if you don't get disable during the policy period, it's like seeing your premium payments going up in smoke since you won't receive any payments from the policy.
  • Causes of disability. Even if you count the probability of your getting a serious illness during the policy period as very low, you still have to account for the possibility of your being injured in an accident.
  • Kind of employment. If you are employed, you should check whether your company already provides you with disability insurance. There may be no need to purchase a separate disability insurance policy, especially if the policy you have with your company is portable, meaning you can bring it with you in case you transfer jobs. If you are self-employed, then you may need to buy disability insurance to provide for this eventuality since you are the one primarily responsible for "employee-benefits" that you may need.
  • Social Security Disability benefits. Social Security may provide you with sufficient disability benefits to ensure that you can pay your bills and mortgage. However, the disadvantage with trying to secure eligibility for Social Security disability may be complicated. Social Security administration has a list of eligibility requirements you must meet before you can be paid disability benefits - and there is the possibility that your application may be denied.

These factors should be carefully considered when you are thinking whether you need to buy disability insurance or not.

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