Disability insurance is one of those ignored and overlooked investments. People understand the importance of insurance for their health, car, home and even life, but disability feels like an unnecessary expense.
The majority of Americans feel the same way. But the majority of Americans should also be treating disability insurance as another non-negotiable expense. Here’s why disability insurance is so vital for professionals:
Disability Insurance is a Smart Investment
This infographic breaks down a lot of facts and figures about disability insurance, including this sobering statistic: One in four people will become disabled at some point in their life. That number is pretty steep, especially when you consider what’s at stake.
Consider everything you’ve put into your career. With that much time and money invested in one area of your life, it makes sense to protect it as best you can. Disability insurance gives you the peace of mind to know that you could weather a setback without the added financial stress of covering your costs.
Additionally, your policy is going to stay with you no matter what job you go to, and you lock in your price so you’re not paying higher fees in the future.
It’s Especially Important for Business Owners
Disability insurance makes sense for most people, but it’s imperative for business owners. As a business owner, you need to consider not only your job, but the guidance of your employees and the ability to keep the business running. It’s not just your job on the line; everyone on payroll and their families depend on you as well. What would happen if you or one of the other owners became disabled, even for a short time? Could you survive in your day-to-day operations and expenses?
So it’s essential for you, but it’s also beneficial to offer disability insurance as part of a benefits package. Consider that nearly half of all employees today couldn’t afford $1,000 for out-of-pocket medical expenses. Plus, 64% of employees say a healthy benefit plan makes them want to work harder and perform better on the job.
Disability Insurance for Physicians
Disability insurance works a little differently for physicians. Benefits are capped for doctors in residency or fellowship between $5,000 and $6,500. However, once you completed your residency or fellowship, your monthly policy benefit can be increased based on your new, higher income.
Consider your monthly expenses when you’re shopping around for a policy so that you know how much coverage you need. Just be aware that coverage will typically only replace 60% of your annual income.
Choosing a Policy
Disability insurance is highly customizable, which makes it simple to find a good fit for your lifestyle. You can choose between short term and long term disability coverage.
Short term: 0-14 day waiting period with a two year coverage timeline
Long term: Waiting period of weeks or months for coverage up to lifetime
Long term disability is usually the way to go, because short-term could be replaced with an adequate emergency fund.
There are also several discounts that can make policies more affordable, like: (These can vary by state and insurance company)
- Being a student or a resident
- Having 3 or more income earning adults in a family
- Companies with 3 or more 1099 employees
- Gender-specific rates
- Association discounts
Make the Most of Your Disability Insurance Policy
If you decide to go with a disability insurance policy, it makes sense to start as soon as possible. Premiums when you’re young and healthy reap the most benefit later on, and they’re more affordable on a monthly basis.
Ultimately, disability insurance offers you and your family the peace of mind knowing that if you became disabled, you’d still be able to pay the mortgage and put food on the table. If you have income that people depend on, it’s a smart financial investment to protect it.