What is Disability Insurance?
This type of insurance is designed to cover an individual who is out of work due to injury or disability. When you purchase insurance to cover disability, you’re providing income in the event of an emergency situation. It enables someone who has experienced an injury or other disabling event to recover without having to worry about returning to work too soon, which could potentially make the initial injury worse. In general, the policy is designed to enable you to still receive between 45-65% of your gross income even when you are unable of coming to work. The income is tax-free.
Who Should Get It?
Disability plans are designed to cover anyone who can’t afford the loss of income that would occur if they were out of work for weeks or months. While many employers sponsor basic disability plans, these plans might not be enough to provide adequate protection if you were out of work for weeks or months. Look into your employer-sponsored disability plan carefully before assuming that it will be adequate to take care of your needs following an injury. If your employer does offer a plan, a supplemental disability plan will help make up the difference between the two.
Disability coverage is also important for individuals who are self-employed or who own their own companies. In these situations, the loss of income due to disability could be potentially catastrophic, so it’s important to make sure that you’re covered.
What Do I Need to Know About Disability Insurance?
As you’re choosing your disability plan, there are a number of factors you’ll want to consider. Look over waiting periods and the maximum amount of time that will be covered by the plan. Remember that the premiums you’ll pay up front for the plan will depend on these factors, but they will also determine how much you receive if you do experience a temporary disability.