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What is disability insurance?

Disability insurance quote
Disability insurance quote

This is a type of insurance policy that pays a benefit when you can’t work due to illness or injury. The insurer pays a percentage of the salary until you resume your normal duties. While the chances of missing months or years of work may seem remote, disability can happen to anyone. So, how far can you go without a paycheck? Read on and learn more!

You can classify disability insurance either as short-term or long-term. Short-term disability insurance pays out for a few months to one year. It has a waiting period of two weeks and replaces 60% to 70% of your salary. Since most of us don’t have enough savings to cover a few months out of work, the policy can be very useful. This type of insurance may not be necessary if you have enough savings to cover your expenses.

Long term disability insurance pays monthly benefits that can last for 2-10 years, or until retirement. The monthly benefit can replace 40-60% of base salary and has a waiting period of 90 days. Each insurance cover has its own characteristics. It’s important that you know the features before you sign up. The cover will help to lighten the financial burden when you’re not working.

Is there disability insurance for the self-employed?

Disability insurance is important for self-employed individuals. If you’re unable to work because of disability, your business could be at risk. This could also affect your personal life because you still have to pay the bills. Disability insurance will provide some security before you resume your normal duties.

Disability insurance quotes

If you want to get the right policy, you should compare different quotes from the insurance companies. This eliminates the guesswork out of the purchasing process. Many companies offer disability insurance quote for free. Also, make sure you find the right amount of coverage, get an online estimate, and request a full proposal from a licensed expert. Select from A-rated disability insurer.

Some insurance companies offer flexible options while others are best for certain professions. Make sure you consider the coverage areas, wait times, and duration. Keep in mind that you don’t have to spend countless hours shopping for the best insurance. You can get a secure and personalized service at the comfort of your home or office.

Disability insurance cost

The cost of disability cover will depend on several factors. They include the age of the insured, amount of benefit, insurance carrier, type of occupation, length of benefit, among others. On average, long-term disability insurance costs 1%-3% of the annual salary. If you’re making an annual income of $100,000, you can budget for $3,000 per year.

The higher the chance of injury at your workplace, the more premiums you pay. For example, a surgeon is more prone to injury than a physician. The truth is that a simple hand tremor can end a surgeon’s career. Likewise, an accountant has lower monthly premiums than a construction worker. Avoid setting the benefits too low as this can be a great hardship if you get disabled.

A shorter waiting period requires higher premiums. For example, a 60-day elimination period can cost three times as much as a 3-month waiting period. It makes sense to use your own money to cover the costs of the 90-day elimination period before the policy comes into effect. You can also reduce your monthly premiums later in your career. This can be beneficial when you don’t have to pay for tuition fees for your children anymore. And as you near your retirement, you can drop the policy because the chances of getting disability are far less.

While there are many ways of saving disability insurance cost, you should not drop important protections. To be on the safe side, make sure you get a guaranteed renewable policy. As long as you pay the premiums on time, the insurer cannot cancel the policy or change terms. The second tip is to choose an adequate length of coverage. Most long-term disability insurance policies pay out benefits up to retirement age.

Final thoughts

If you’re thinking about buying disability insurance, you should ask some questions. How long do you want the benefits to last? How much income do you need to maintain your lifestyle if you become disabled? How long can you wait before the benefits kick in? When making your decision, focus on the policy terms and financial costs. While most people downplay the seriousness of disability insurance, illness can strike anyone.