May is Disability Insurance Awareness Month. This is an opportunity to review your disability insurance and determine your financial capacity to weather a serious illness or injury. With the advent of new medical technologies, we are all more likely to be disabled than to die. The truth is that during the course of your career, you are three and a half times more likely to be injured and need disability coverage than you are to die and need life insurance.
Here are five things to know now:
- YOU are your most valuable asset. Your most valuable asset is not your home or your car. It’s you. Your ability to make a living allows you to enjoy the riches and opportunities associated with your life. A roof over your head, eating food you enjoy, paying your child’s educational expenses, taking that next vacation—this is all based on your continuing ability to earn income, whether you are working for yourself or someone else.
- Life happens. Forty-one percent (41%) of long-term disability recipients over the 2009-2012 time period were younger than 50, with a third of those under 40 (according to Unum, an insurance provider).
- Don’t I have disability insurance through my employer? Employer-provided disability is short-term disability, which kicks in after you have exhausted your sick time. Benefits are usually available for one year. If you believe you have disability insurance through your employer, check your policy. What is the maximum monthly benefit you can receive? How does that coincide with your monthly expenses? Many employer policies allow you to purchase more insurance. If your expenses are greater than the maximum benefit, consider purchasing additional insurance. And note: there may be a cap on the monthly benefit amount, regardless of your income.
- Private disability insurance. Private long-term disability insurance can pay benefits until you reach age 65 or the end of your life. As with all insurance, the time to buy it is when you don’t need it. Speak with a financial advisor, insurance broker, or contacts through professional groups and affiliations to gather additional information about the types of disability insurance available and what meets your need.
- What should I do now? Review your ongoing expenses and your take-home pay. Thoroughly check out your options during your next open enrollment. Disability insurance and its myriad possibilities can be confusing. However, the time to act is now—you may not be eligible to purchase disability insurance after an injury or illness has occurred.