Wednesday, June 15, 2022

How Important Is Disability Insurance

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What Are The Types Of Disability Insurance

Three Important Things to Consider When Applying for Disability Insurance Benefits

Now, there are two types of disability insurance youll see a lot of: short term and long term. They basically do the same thing in how they replace part of your monthly salary. But well get more into that later.;

Even though they do the same thing, short-term and long-term disability insurance have some differences you need to know about. Heres how they stack up:

Why would you get it?

Only if your employer offers it at no cost to you

If you rely on your income and you dont have savings to replace it long term

Disability Insurance: Do I Really Need It

Own a car and you probably insure it because you know its important. Its so important most states require it by law.

A 2016 Insurance Information Institute poll found 95 percent of homeowners held insurance and 41% of renters carried insurance too.

We understand how critical good health insurance is. And many people purchase life insurance to support their family or business in the event of their death.

It makes sense to protect yourself, your car, your house, and your possessions from fire, theft, injury, and liability.

But what about your income? How important is disability insurance?

What happens if you are sick or injured and cant work for an extended period of time?

Individual Disability Insurance And Why It Is Important

What is your most valuable asset?; Your home?; Your Car?; Your Health?; For most people, it is their income. Your income pays for both the big things in life the mortgage, car, food, utilities, vacations and lifes little things childrens activities, movie tickets and cell phones.; Most of us buy insurance to protect our home, car and health, but we ignore the most important asset which needs to be protected OUR INCOME. Without your income, you cannot afford any of your basic needs. This article discusses disability insurance and why it is important.

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How To Get Disability Insurance

You can get disability insurance by finding out if your employer offers a long-term disability insurance plan. If they dont, then you need to get in touch with an insurance professional. Dave recommends Zander Insurance. Theyll walk you through the process and help you get the right amount of disability insurance for your specific situation. ;

Dealing with a disability can be scary enough without the extra worry of how youre going pay the bills. Thats why protecting your paycheck with the right kind of disability insurance is a critical part of keeping your family and future secure. To get started in finding the best disability insurance option for you, check out our new Coverage Checkup Tool today!

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

Importance Of Health And Disability Insurance In Canada

The Importance of Disability Insurance

Buying health and disability insurance in Brampton is a good idea. Oh, you already have life insurance? Read this article to understand why disability insurance holds significant importance for an individual.

What according to you is the most important asset that you own? Is it your home? Your health or car? What if we tell you that youre not even close to guessing whats your most precious blessing? Your ability to earn money with your hard work is what you must cherish and protect as an income is what helps you keep your family fed, car running and phones working. We dont mind paying exorbitant amounts of our hard-earned money to insure our car, get a property mortgage but we often tend to ignore to insure our income. A fixed source of income allows you and your loved ones to enjoy the perks of life, such as travel, buying new stuff, partying with friends and almost everything that you enjoy. But have you thought- what if you lose the chance to earn money due to unforeseen circumstances?

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What Does The Government Provide

There are a variety of government disability programs:

  • Social Security disability insurance pays benefits to qualified individuals under age 65.;
  • Supplemental Security Income pays benefits if you are over 65.;
  • All states offer workers’ compensation, but only if your injury or illness is work related.;
  • Military personnel are entitled to veterans’ benefits only if their disabilities are service related. If you’re injured in a traffic accident or at home, you may be out of workand out of an income.

The Disability Insurance Underwriting Process

Your risk of becoming disabled plays a large role in determining how much you will pay for coverage. So how exactly do insurance companies calculate your risk of becoming disabled?

Individual disability income insurance requires underwriting. Whereas group plans help insurers spread their risk among a large group of policyholders, issuing an individual policy requires the insurance companies to assess the risk of a single applicant.

Before you get caught up in the cost, it helps to understand the various factors that insurance companies look at when assessing risk.

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Todays Question Is: What Is Disability Insurance

Disability insurance! Thats not life insurance. Why are we covering this? Well, life and disability insurance have similar goals and people do get confused as to when they need them and when they can use them.

You buy life insurance to replace your income if you die so your family can keep paying bills. You buy disability insurance to replace your income if you are unable to work due to illness or injury, so your family can keep paying bills.

Disability insurance can be offered through your employer or you can purchase it independently.

Group disability insurance through your employer is usually part of a benefits package. If you cant work for a specific period of time due to a non-work-related illness or injury, the policy pays out a portion of your income.

Group disability insurance benefits are not transferable. This means if you leave your current employer, the coverage doesnt follow you.

Individual disability insurance is a policy you own completely separate from your employer benefits.

You can have a group disability policy through your employer and also buy an individual policy for more secure income protection because even if you leave your job, your individual policy goes with you.

If you become disabled and receive benefits, income from your group disability plan is taxed because your employer pays the premiums and deducts the expense.

Consider the effects a disability could have on you and your familys lives, your standard of living, and savings.

My Company Provides Disability Insurance Isn’t That Enough

Why is Disability Insurance So Important?

You might think you don’t need disability insurance if you have coverage through work. But in most cases, that only covers around 50-60% of your incomeâand only for a certain amount of time. Plus, youâll have to pay taxes on any payments you get from that coverage. But when you have your own policy, you can get closer to having 100% of your income covered, the payments you get will not be taxed, and you’ll stay covered even if you change jobs. Calculate your coverage amount.

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Disability Insurance To Fit Your Life

Did you know that one in four people will be disabled at some point during their careers?1 Disability insurance is designed to protect your income by replacing a portion of your paycheck if you’re ever too sick or injured to work. It lets you rest easy knowing that your expenses will be covered, keeping your lifestyle intact and your financial plan on track so you can focus on getting better.

The Risk Of A Disability During Your Working Years May Be Greater Than You Think

In 2020, the U.S. Social Security Administration reported that more than 25 percent of 20-year-olds will experience a disability that keeps them out of work for at least a year before they reach retirement age. Fortunately, disability insurance helps you maintain a steady stream of income when you cant work due to illness or injury. Whats more, its easier and less expensive to get disability insurance when youre young and healthy.

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Disability Insurance For The Self Employed

Planning, strategizing and mitigating risk is especially important when you have a business and are self-employed. Disability insurance is a particularly important tool to mitigate risk for people who own small businesses;and are self-employed. Affordable disability insurance may protect the business too. Discuss with your State Farm®;agent the expenses and other financial obligations you need to cover if a disabling injury or sickness occurs.;

Know The Difference Between Partial Disability And Residual Disability

The Importance of Disability Insurance for Working ...

Partial Disability Benefits: Are paid to the person who is insured, and according to their policy, is considered partially disable. For example if youâre injury is only to one part of your body. You are eligible for a flat percentage usually up to a maximum of 50%.

Residual Disability Insurance Benefits: Is less common, and covers you if you experience a minimum of a 20 per cent loss of earnings. The monthly amount is based on a percentage of your lost income.

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A Disability Happens Way More Than You Think

I know what you are thinking, because I hear it all the time.

John, I am simply not going to be disabled. That happens to other people!

Well, not really. Remember what I said about a disability? Really, its anything that stops you from doing your job as a doula.

Any of these situations could mean a disability and prevent you from doing your job as a doula:

  • Cancer
  • Stroke

The list goes on and on.

Fact is, 1 out of 4 working adults will face some type of disability before the age of 65. Contrast this fact with the chance of unexpected death, say from a motor vehicle accident which is 1 in 114. Even dying from cancer has better odds: 1 in 7.

But, John. I know I wont get in a wheelchair, you exclaim!

Wow. How do you know that? If you know your future, you should not be a doula. Instead, you should play the lottery if you know your future!

Jokes aside. In all seriousness, when we think of a disability, we usually think of someone in a wheelchair, right?

This is completely untrue. Although the stats vary from carrier-to-carrier, one thing is certain. Illnesses and musculoskeletal issues make up a huge proportion of disability insurance claims. These people arent in a wheelchair. Moreover, they cant do their jobs.

In other words, you are more likely to be disabled from a disease or illness rather than a sudden accident.

Your Life And Disability Insurance

Life and disability insurance play important roles for your entire family. Its hard to think about or plan for, but if you were to experience a fatal or debilitating accident or illness damaging your ability to provide your family with income, life and disability insurance could help maintain your familys financial well-being.

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Example Of Disability Insurance Cost

Lets say you are 27 years old, making $75,000, working as a dental hygienist. You gave me a call and wanted to know about disability insurance. You are young and healthy, with no issues, although you see a doctor for an annual checkup. Great! We discussed the elimination period, benefit period, the own-occupation disability definition, among other things. You are young enough that you can afford a to age 67 benefit period.

Heres an estimated premium, 90-day waiting period, to age 67 benefit period, with a $3,750 monthly benefit: $110 per month. Thats about $3.67 per daybetter than the latte you buy at your favorite coffee shop! Not a bad premium at all, considering the true own occupation definition as well as other favorable benefits. At your age, the to age 67 benefit period is still affordable.

But, you tell me youll think about it Or, you are too busy. Or, there is some other reason why this isnt important to you at this moment.

13 years later, at age 40, you call me again. Now you are ready. You want the same plan! You were diagnosed with some minor health ailments. No biggie. However, you now go to the chiropractor. You go a lot 2 X per month for back adjustments. The carrier says this frequency indicates an underlying back issue. They have a point. It could. So, they place a back and spine exclusion.

Moreover, to add insult to injury, I tell you rates changed. You knew they would. But, I could feel you fall off a chair as I tell you your new rates:

What If My Employer Provides Disability Insurance

The Importance of Disability Insurance

If your employer provides you with disability insurance, that is fantastic. ;Not all employers provide that benefit. ;The employer provided policy, however, generally isnt enough.;

Most policies available through an employer only protect a percentage of your income up to a maximum monthly benefit. ;For example, it might cover 60% of your earnings up to $10,000/month. ;If the employer is paying for the policy, then the monthly benefit will likely be taxed as ordinary income.;

Most doctors will need a supplemental disability insurance policy outside of work to cover their earnings that arent covered by their employers plan. ;If you are earning $25,000 per month and your employers policy only covers $10,000 per month of earnings, you have $15,000 of unprotected monthly earnings.;

Also, the language in the policy is key. ;We often see the employer-sponsored disability plan lack the true own occupation definition of disability. ;Or it might cover your specialty for two years, but after two years on claim, if you are capable of performing any job, you are no longer considered disabled. ;It is important to read through the contract to understand what you are actually covered for.

The plan through work is usually pretty bare bones and will sometimes lack important features, such as benefits for partial disabilities, or benefits that increase over time to account for inflation.;

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Advantages Of Disability Income Insurance:

  • While life insurance protects the family should you die, disability insurance protects the family should you lose the ability to work.
  • Disability insurance helps provide security. It pays a monthly income to help protect the family home, savings accounts, retirement funds and other assets should you become disabled.
  • Monthly benefits are received tax-free.
  • You own the policy and it will stay in place throughout your working years as long as the premiums are paid.

Consider the effects a disability could have on you and your familys lives, your standard of living, and savings. In addition to helping individuals obtain life insurance coverage, we work every day with people needing disability insurance as well.

Head over to our disability insurance;page if you are interested in obtaining a quote. We just need a few pieces of information and then our team will shop the market and provide you with personalized disability insurance quotes with the best options available.

Do You Have A Preexisting Condition

Notwithstanding the potentially rigorous medical underwriting process, workers with preexisting medical conditions that increase their risk of temporary or permanent disability may be more inclined to apply for LTD coverage than their healthy peers. Job-seekers with preexisting conditions may want to pursue employers that offer no-exam group disability insurance, if common in their fields.

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Calculate Your Life Insurance Needs

How much life insurance do you need? You can begin determining that by reviewing the current expenses listed on your spending plan, then move on to determining expenses you think you might have in the future. And because the cost of things generally go up , youll need to calculate how much the cost of something at todays prices will cost many years from now.;

For help in determining how much life insurance you need, speak with a life insurance agent or financial advisor, preferably one with experience in working with families of children with disabilities. To learn more about life insurance and the issues related to it, visit the Insurance Information Institute at www.iii.org .

Areas to Consider When Calculating Insurance Needs

  • How much money your family needs to live on nowthe day-to-day expenses you listed in your spending plan.
  • How much money you will need to finance your familys future expenses, such as college, the long-term care of your child with special needs, career training, and the long-term care for you and your spouse.
  • How much you owe now. If you created a Debt Reduction Plan, use the total debt amount you listed. Consider future debt you might incur for other financial goals around education, career, and retirement.
  • Medical expenses that are not covered by your health care plan.
  • Funeral expenses and final estate-settlement costs.

Your Greatest Asset Is

How Important Is Disability Insurance And Do I Really Need ...

Millennials have long-term earning power, making disability insurance essential. While you may not have many assets right now, your ability to earn an income is your greatest asset, even bigger than a house or 401k.

Your ability to earn an income is your greatest asset. Without it, you have nothing.

Think about it: no ability to earn an income means no nice life, and no nice things.

We just discussed how relatively inexpensive disability insurance can be, particularly compared to other non-essentials.

What if you cant afford to age 67 coverage? Well, a 5 year benefit period works, too. Look at it this way, youll have a bucket of money available to you upon a claim, that can last up to 5 years.

Many industry statistics suggest most long-term disabilities are 30 months. However, the claims departments I speak with tell me claims last around 18 months.

So, a 5 year benefit period can work. In this case, youll insure $200,000 of your income.Isnt that better than raiding your 401 or having to sell your home to make ends meet?

A properly constructed disability insurance plan prevents you from utilizing your assets for your care and needs.

And, as we discussed, disability insurance doesnt have to be that expensive for millennials.

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