Disability Insurance can replace some income, or nearly all depending on the options you select, that you might lose because you are very sick or badly injured.
Sounds simple enough, right?
But there are many types of disability insurance. Certain types of coverage are available to everyone:
Essentially, if you’re unable to perform any job duties at all, you’re probably eligible for disability payments from Social Security. But, these payments are not very high, and it’s very unlikely that they’ll replace most of your lost income.
Note. Further, as much as 58% of all applicants for disability benefits are initially denied by Social Security. In addition, you are eligible for benefits only after you have been disabled for five months, and if the disability is expected to last at least a year. Finally, any benefits you receive from Social Security are taxable.
If you are injured or become sick on the job, you are eligible for benefits under your employer’s workers’ compensation insurance, which all businesses must have. However, the benefits you receive vary from state to state, and depend on the level of your disability.
In addition, the benefits are relatively low and won’t adequately replace income for those who earn mid- to high-range salaries. Again, the injury or illness must be job-related, or substantially job-related.
Disability Coverage Through Your Employer
Many larger businesses offer disability insurance at somewhat reduced rates to their employees as part of a benefits package. However, these so-called group disability plans likely will have limits on the income they will replace (say no more than 60% of your salary) and have limitations on the time such benefits will be paid. Further, the benefits are taxable, and the coverage cannot be taken with you if you change jobs.
If you’re serious about protecting your income in the event you’re injured, or become too sick to work, you really need to add Disability Insurance to your to-do list. And not just any disability insurance, but a policy that’s specifically designed for your needs, and will be available to you even if you lose your job.
If you’d like to learn more, contact one of our Licensed Advisors . We’re here to help.