Disability Insurance- What happens if you don't have it?

Vincenza Vicari-Bentley, AFC
Empowering Financial Wellness Program Coordinator

First let’s talk about what disability insurance is and why you need it. During our working years the ability to earn an income is important and necessary for survival. But what happens if you lose your ability to work, even temporarily? The Social Security Administration estimates that one in four 20-year-olds will experience a disability for 90 days or more before they reach age 67 and during their working years. You are also three and a half times more likely to be injured and need disability coverage than you are to die and need life insurance. While these are sobering statistics, we can consider a disability insurance policy to protect our assets. 

The basic concept of disability insurance is that if you are sick or injured and you can’t work, disability insurance would help replace a part of that income you lost. There are many different kinds of disability insurance policies for either short term or long term that can be customized to your exact needs and budget.

A short term disability insurance policy replaces 60% of your gross income for a limited period of time, usually 3 to 6 months. Most employers offer short-term disability insurance either for free or for very little cost. Long-term disability insurance works similarly to short-term insurance. Namely, if you can't work, you receive payments that replace a portion of your income. The difference is that it takes at least 90 days for  long-term benefits to kick in (this is known as the waiting period). Unlike short-term disability insurance, long-term disability can pay out up until retirement.

The best way to learn more about disability insurance and to get a disability insurance quote is from a licensed insurance agent and you can also check with your employer and compare coverages and costs to find what fits best with your needs and your budget.