Considering Disability Insurance
Disability insurance costs about one to three percent of an annual income, which means that if you make $50,000 per year, disability insurance will cost you $60 to $125 a month. This is affordable, especially if you have savings in case of an unexpected illness or disability. However, most people don’t have enough money saved up to last for a year or two of disability.
It can be difficult to qualify for disability insurance as you get older. Premiums will also increase, so you may have a hard time getting an affordable policy if your health is poor. It is important to understand that disability insurance is not just for “freak accidents” – the majority of claims are for physical injuries, heart attacks, and cancer. Getting disability insurance is a wise investment.
Several private companies offer disability insurance. Typically, employees pay a portion of the cost, and the benefits are taxed. Most employee-sponsored plans have an elimination period between the time of an injury and eligibility for benefits. Unless you’re able to negotiate with the employer, this elimination period can be as long as two years.
If you don’t have group disability insurance coverage, consider acquiring an individual policy. These policies can supplement the group plan offered by your employer, and can provide up to 90 percent of your income. The advantage of an individual policy is that you’re paying for it with after-tax dollars. In addition, individual policies do not expire when you leave your job.