Today, we’re talking about whether you need disability insurance. Last year, I attended a conference focused on motivating people to keep pushing for their goals. Unexpectedly, the final speaker shared a personal story instead of the usual motivational speech. She was a self-proclaimed workaholic until she suffered a brain aneurysm at the gym, which kept her away from work for a year. Her story highlighted how grateful she was to have disability insurance, making me reconsider whether I should get it too.
So, what is disability insurance? Often called DI, it protects your income if a disability stops you from working. The truth is, none of us can predict if or when we might become disabled, temporarily or permanently. When that happens, the last thing we need is to worry about lost income. DI can cover a significant portion of your salary, giving you financial security. The cost of DI usually ranges from 1% to 3% of your salary, depending on your age and the coverage you choose. This insurance can replace about 60% to 80% of your pre-tax income.
If you’re wondering if you need disability insurance, think about these four points:
1. **The Possibility of a Disability:** No one likes to think about losing their abilities, but it’s always possible. Around 25% of workers have experienced a disability lasting over three months during their careers. Even a temporary disability can disrupt your finances, especially if you have a family history of disability, which puts you at higher risk.
2. **Your Role as a Provider:** If you’re the main earner in your household, disability insurance is crucial. Like many others, I depend on my physical and mental abilities to work, and the thought of an unexpected illness or injury causing a financial crisis is scary. Did you know that 62% of U.S. bankruptcies and over half of all mortgage foreclosures are due to illness or injury-related expenses?
3. **Your Professional Hazards:** Jobs like doctors, nurses, and contractors come with higher risks of injury or illness. While some employers offer support if you get hurt at work, relying solely on that can be risky. They may not always cover your medical bills or provide adequate workers’ comp, as I learned from a family friend’s situation.
4. **Your Financial Capabilities:** With so many bills to pay, adding another insurance cost might seem tough. First, look at your budget to see what you can afford. You can always start with less coverage and increase it later if needed.
In conclusion, disability insurance is something worth thinking about. Planning for your future success is important, but so is preparing for potential setbacks. Deciding whether you need DI depends on your age, job, income, and family situation. Start by getting quotes from providers and understanding what’s covered.