Is Disability Insurance for You?

Most of us should at least consider signing up for disability insurance.

Disability insurance provides an income if you become . you guessed it, disabled. According to some reports, nearly half of all mortgage foreclosures are due to people being struck with a disability. Are most people taking steps to prevent this? Nope. In fact, less than 15% of life-insurance purchasers opt for disability insurance. Unfortunately, many people become temporarily incapacitated at some point in the course of their lives, especially considering that even a pregnancy can qualify as a disability under some plans.

Think of it this way: If you're 35 years old and earning $50,000 per year, and you become disabled for the rest of your life, you'll be losing roughly $1.5 million in income from age 35 to 65. Disability insurance serves to help make up for that loss.

We often worry about and plan for death, but we tend to give little thought to the possibility of an extended period of disability. If you make your living as a chimney sweep and you suffer a bad wrist break, you'll likely be unable to work for quite a while. That's where disability insurance would kick in, protecting you from that loss of income.

Depending on the kind of coverage you have, while you're disabled, disability insurance might pay you a fraction of your salary or your entire salary. It might continue until you reach retirement age or stop after a number of months or years. Many people are covered by their employers. Check and see what coverage your company offers you and evaluate whether it's good enough. You may want to purchase additional coverage either through your employer or separately.

Disability insurance can seem expensive, but that's largely because there's a high probability you will have to use it.

Learn more about the not-so-exciting-but-still-critical topic of insurance in our Insurance Center. You may not have thought about some kinds of insurance, such as disability or long-term care insurance, but they're vital for many people. And of course, properly insuring your property is vital, too.