Who Should Get Disability Insurance?

You never know when you may suffer a severe illness or injury that will prevent you from working. If you’re unable to work and earn an income and don’t have financial safeguards, you may find yourself in trouble. That’s where disability insurance can help. A disability insurance policy can help provide wage replacement benefits if you’re unable to work following a covered illness or injury.
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Who Needs Coverage?
For many people, disability insurance doesn’t carry the same importance as auto, life or homeowners insurance coverage does. Still, it’s vital insurance that can help prevent financial difficulties. Many people don’t want to consider being unable to work because of a disability. However, according to the Social Security Administration, more than 1 in 4 of today’s 20-year-olds will become disabled before age 67. Disability insurance can be the difference between maintaining their lifestyle or tumbling into financial insecurity.

What Are the Types of Disability Coverage?
There are two main types of disability insurance: short-term and long-term coverage.

Short-term disability policies cover employees who need to spend a short time away from work. Usually, there is a waiting period of up to 14 days with a maximum benefit period of no longer than two years.
Long-term disability policies cover employees who have more lengthy or lifelong events. Usually, there is a waiting period of several weeks to several months, with a maximum benefit period ranging from a few years to the rest of your life.

These coverages replace a portion of your monthly base salary up to the capped limit. Some long-term policies may also pay for additional services, such as training to return to the workforce.

Nexus Point Advisors can help you navigate disability insurance to ensure your financial livelihood in a covered incident.

Should I Buy Disability Insurance?
You may want to consider purchasing disability insurance if you don’t have any or enough coverage at work or you’re self-employed. Buying a disability policy may enable you to:

Tailor your coverage with extra features, such as annual cost-of-living adjustments.
Choose the insurance company with the best products.
Keep your coverage if you change jobs. When you leave a company, you also leave behind your employer-paid coverage. Sometimes, you may be able to retain your coverage if you pay the total premium for your workplace’s coverage.
Collect benefits tax-free if you become disabled. If the employer pays for coverage, you must pay taxes on those benefits.

What Affects the Disability Coverage Costs?
Numerous factors can affect the cost of your disability coverage, including:

Age and health—You’ll typically pay more in premiums the older you are and the more health problems you have, as the statistical probability that you’ll experience an illness or injury is higher.
Gender—Typically, women pay more because they tend to file more claims.
Smoking or Non-smoking—If you don’t smoke, you pay less in premiums. Smokers tend to have higher incidents of injury and illness, which makes their overall risk of needing to file a disability claim higher.
Occupation—If you work in a high-risk job, you probably will pay more in premiums, as the probability of an injury or illness is higher.

How Much Coverage Do I Need?
It’s important to review your regular expenses and financial habits. Look at your costs for mortgage payments, food, utilities and savings goals, such as a kids’ college fund, and if you have a partner who can contribute financially to help cover costs.

Balance Your Financial Needs
Disability insurance is a meaningful conversation with your financial advisor and an insurance company. They can help you determine if you can afford to invest money into insurance or if those monies are needed for retirement savings or other financial obligations and help you balance your financial needs.

Who Should Get Disability Insurance?

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