Are you a self-employed worker? What happens if one day you are unable to work? Physical disabilities are more common than fatal illnesses, yet many people maintain life insurance over disability insurance. This guide lists some things you should know about the benefits of disability insurance.
What Does Disability Insurance Cover?
Disability insurance is designed to cover your lost earning potential while you are unable to work. Disability insurance won't cover the full amount that you used to make, but some can cover up to 60 percent of your regular salary. Though you may need to supplement this with other forms of income, it can help you get on your feet.
When you work for an employer, you have other options for disability insurance. You may even be covered under workers compensation. Further, an employer may still pay you when you need to have time off.
When you work for yourself, you're in charge of your own insurance and coverage needs. Without disability insurance, you could find yourself in an extremely negative financial situation if you are unable to work.
Are There Different Types of Disability Insurance?
There are two primary types of disability insurance: short-term and long-term. Short-term insurance will cover you for a period of about 2 to 5 years, depending on the policy itself. As an example, a worker with carpal tunnel may need 3 years to recover, so their short-term disability policy will kick in.
Long-term disability is for those who may need to stop working for a longer period of time. The policy may be for a set period (such as 10 years) or may last until the person would usually retire.
Many people get both short-term and long-term disability policies.
How Do I Choose the Right Disability Insurance?
As with any insurance policy, there are many factors involved in selecting the right disability insurance. Every insurance company is going to have a different policy and package; it's up to you to figure out which is the best one for you. Some factors include:
- The cost of the premiums. You'll be paying premiums monthly. Short-term policies cost less than long-term policies, but long-term policies will give you more coverage over time.
- The waiting period. Most policies are going to have a long waiting period before benefits can kick in. If there's a shorter waiting period, then you'll probably pay more in your premiums.
- The occupations covered. Some companies will only cover low-risk occupations. If you're in a high-risk occupation, such as manual labor, then you may find it more difficult to get disability coverage or it may be expensive.
- The guarantee. A guaranteed policy is a policy that will continue to be renewed as long as you continue to pay your premiums. Non-guaranteed policies can be changed between policy renewals, potentially making them less useful. Non-guaranteed policies can raise your rates, change requirements, or alter the coverage you have available.
- The requirements. Some policies require that you not be able to work at all to pay out, while others pay out if you simply can't complete your current job anymore. It's better to pay for the latter type of policy. Policies that have restrictive requirements can argue that you can do some type of work, and can consequently avoid paying you if you become disabled.
If you're a self-employed individual, then disability insurance may be important to your peace of mind. Consider what might happen if you woke up tomorrow and were unable to work. If you don't have another source of income, then disability insurance is exactly what you need. Contact our team at Livings Insurance to get a quote today.