Disability Income Insurance
Most people would depend on their paychecks to pay for their monthly expenses. If you are like most people, then chances are you do, too. But what do you do if you get into a disabling accident or you develop an illness that would prevent you from working?
How would you handle expenses such as:
* Monthly rent
* Mortgage loan payments
* Car payments
* Day to day living expenses
* Children’s education
* Savings for retirement
According to the 2004 Field Guide by the National Underwriter, at the age of 40, your chances of becoming disabled for 90 days or more prior to age 65 is 43%. Most people do not realize this risk of becoming disabled so many do not even consider disability income insurance.
Some put up reasons such as that their employer provides coverage for such or that they have been saving for similar situations. However, consider also that your employer has a business to run.
How long do you think would the business continue to pay you? How long before they would have to hire someone else to replace your work? And concerning your savings, even if you save about 10% of your earnings every month, one year of disability could wipe out 10 years worth of savings. Can you afford that?
The Advantages of a Disability Income Insurance
A disability income insurance can help keep you financially stable during difficult times. Such a policy may include paying you a monthly income when you are sick or hurt and consequently unable to work.
The disability may be short term or long term. Disability income insurance provides different coverage for each. One important thing to take note of is how your policy defines disability.
How to Buy Disability Income Insurance Policy
Although there are no set steps to take when buying a disability income insurance policy, there are guidelines that would help you through this often difficult process.
The first thing you need to do is to calculate all your current assets as well as liabilities. This is so you will be able to determine how long you could go without your current income after your sick leave and vacation are used up.
Next, write down the number of days. Then, determine how much short term disability income insurance your employer provides and again, write down the number of days. Do the same with long term disability income insurance.
Now, add up all the days and then convert it to years. How old are you at your next birthday? Add your age to the number of years and subtract the total from 65. The result is the approximate number of years you are at risk should you become unable to work as a result of a disability due to an accident or a prolonged illness. This should be the period of disability income insurance coverage you should be aiming for when shopping for a policy.