What is disability insurance? Do I need it?
Disability Insurance protects your income in case you are unable to work due to injury. A disability could be either short term ( ex. a broken leg) or long term (ex. cancer) that results in a loss of work time. The short term usually lasts 3 months - 1 year and long term can span to age 65. With this type of insurance there is a time you must wait before the insurance kicks in, this is called the elimination period. The elimination period is like a deductible payed in time. The longer this period the lower you pay in premium. Once this period is over you will be given 50% - 75% of your gross income. If you do not have enough liquidity to cover a period of time without work, it is a good idea to have this insurance type.
What factors will affect the premium I pay?
- Time you want coverage The longer the coverage the higher the premium.
- Job if your job is more susceptible to injury the higher the premium.
- Lifestyle If you are involved in dangerous activity your premiums will be higher.
- Age The older a person is the higher the premium.
3 in 5 people worry about the financial impact of a disability, yet only 30% of own disability insurance.
1 in 4 twenty year old will become disabled before they retire.
61% of workers know someone who has been disabled and unable to work for three months or more.