YOU ASK:

When do you need your own disability income insurance policy?

WE ANSWER:

In some cases you need disability income insurance, in other cases - you don't.

You need your own disability insurance if:

  • You are self-employed and are primarily responsible for providing your own "employee benefits package".
  • You can't afford to lose your income. Remember that in the event of a disability, you will have to contend with your regular household bills, your hospital bills, as well as any expenses you have during your recovery. "Recovery" expenses can include occupational therapy and prescription medication.
  • You feel that there is a high risk of your being disabled. Look into your personal and family history to see whether there are certain diseases which you have a particular vulnerability to. You should also look into your lifestyle: Do you exercise? Are you a careful driver? Do you have hobbies and sports that can be considered "risky" such as skydiving and windsurfing?

You may not need your own disability insurance if:

  • You have enough savings to cover your monthly needs for the long term.
  • Your employer provides disability insurance as part of your benefits program
  • You are not the primary breadwinner. If the income earned by someone else in your household is enough to cover the family's expenses, then you may not need to provide protection for your income in case you get disabled.
  • You have fully paid your mortgage and car payments.
  • You believe that what you stand to get from Social Security will be enough to cover your lost income. You should also check from other potential sources such as Workers' Compensation, as well as state-sponsored compensation programs. You should also note that Social Security will not pay for short-term disability, only for disability that lasted or is expected to last a year or is reasonably expected to result in death. Meanwhile, Workers' Compensation will only pay if you get disabled as a result of injury or illness related to your job.
  • You are 65 years old or older. Most disability insurance policies will only pay until you are 65 years old.
  • You have saved enough for your retirement.
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