Disability Insurance - A Smart Purchase or Waste of Money?

Let's face it - nobody purchases Disability Income insurance because they actually think they'll ever need it. Most people either do not carry Disability insurance or simply consider it a waste of money. Considering that a debilitating injury or illness is not something most people witness every day, this is a reasonable way to feel. The reality is however that it does happen, and a person is significantly more likely to become disabled during their professional career than die prematurely. So why is it that most people make sure they have Life insurance, but not Disability insurance?

Disability insurance may not be a necessity for everyone - however for someone who depends on his/her ability to continue earning an income, Disability Income insurance is critical. For someone who depends on his/her income, Disability insurance is the most effective way of insuring his/her future and also the future of his/her family. Disability Insurance provides income protection against a debilitating injury or illness. If you are unable to perform the material duties of your occupation, Disability insurance will provide you a monthly benefit to assist in replacing the loss of income experienced. There are many different types of Disability insurance and many different provisions a policy may or may not include.

Rather than going into the details of a Disability insurance contract, it is important to understand the true financial disaster that a debilitating injury or illness can cause. Consider a 40-year old independent contractor earning $150,000 annual salary. By the time this person retires at age 65, he will have earned $3,750,000 - a significant amount of income which allows this person to provide for his family, maintain a nice quality of life and save for retirement. Clearly a Long-Term Disability claim extending the full 25 year time frame would be disastrous - but what about a 4 year claim while battling cancer? Is $600,000 worth of lost income significant to this person?
Unfortunately, this is the type of situation people seem to forget about. They can't imagine becoming permanently disabled so they do not consider Long-Term Disability insurance important. How about cancer, heart disease, mental/emotional conditions and the many other diseases/disorders that can prevent a person from being able to work? Regardless of whether a claim lasts 2 years or 20 years, the impact a Long-Term Disability can have on a person and their loved ones can be tremendous and horrifying.

Almost anyone who is in good health can obtain Disability insurance. Do not make the mistake of waiting until you no longer are able to purchase coverage. A person's income is too important to leave up to chance.

Disability Insurance Vs. Life Insurance - Which Is Better?

I think that most people would agree that the we live in a state of insurance overload in this country. You need insurance to drive a car, you need it to buy a house (at least you do if you want to get a mortgage from a bank!), you need health insurance to cover medical costs... it seems like everywhere you turn there's more insurance to buy!

It can become overwhelming for most people, but there's one area of insurance that you don't want to overlook and it's an area that most people do overlook. I'm talking about disability and life insurance.
First of all, what are these two things?

Life insurance is simply insurance that pays your family a set amount of money in the case of your early death. If you get hit by a train or fall out of an airplane or laugh too hard during a funny movie and choke on a pretzel and suddenly die, life insurance makes sure that your family is provided for financially and that their standard of living does not decrease just because you're not around to pay the bills anymore.

Disability insurance is very similar. The only real difference is that it isn't focused on your death but merely on your disability. This is particularly important if you have a manual labor type job. So if you break your leg and can't work for six months, that loss of income won't affect you because your policy will pay out instead.
Your employer may already have disability insurance as part of your pay package but chances are they don't. You're going to need to find out for yourself whether they offer it or not and if they don't you'll need to go out and purchase it on your own.

In a perfect world you should have both of these types of insurance to cover your family in case you die or in case you get hurt and can't work anymore. Of course, we don't always live in a perfect world and many people choose one or the other... so which one is best?

That's a question I can't answer for you, everybody has to answer that themselves. But for myself I would choose disability insurance as the most important if I had a manual labor job that my family relied on for their sole source of income.

If I die, that's really bad but my wife can either start working herself to make up for lost income, or marry somebody else as crass as that may seem. The point is, they have options.

If on the other hand I lose my eyesight or break a vertebrae in my spine that keeps me from working anymore, then we don't have that many options. My wife may not be able work because she might have to take care of me full-time and alternatively she wouldn't be able to marry somebody else because I'd still be around, barring divorce of course. The point is, we have less options and you should always insure the scenario with the fewest options.

How To Pay Your Bills If Your Income Stops Due To Illness

In this article today I would like to discuss several tips, tricks, and techniques that you can use to make sure that you are able to continue paying your bills if your income stops due to an illness.
The recession that started in late 2008 and has continued into 2010 has made it particularly hard for many Americans to get by. Even for those of us who are lucky enough to still have a job, the cost of everything seems to be rising from day to day making it harder to make ends meet. What would you do if you suddenly found yourself out of work because of an illness that you have no control over? That's what I'd like to talk about today.

In my opinion, everybody should have disability insurance yet hardly anybody ever talks about it. First of all, what is disability insurance? Quite simply it is insurance that pays you when you become disabled and can no longer work.

What makes a good disability insurance policy? Well let's talk about that... the first thing you need is a policy that covers at least 40% or better yet 60% of your take-home pay. When I say take-home pay I mean the actual money you take-home. The benefits that you get from disability policies are usually tax-free. The more money your disability policy pays out the better, but the more money it pays out, the more expensive the policy will be so a good rule of thumb is 40 to 60% of which will need to live.

If you've already planned for your retirement then you don't need to factor that in to your disability policy. Therefore you only need your policy to cover you during your working life. If however, you have not factored in or began saving for retirement, then make sure your policy pays out enough money for you to save for retirement as well.

Next, make sure your policy has as short a waiting period as is possible before you begin receiving benefits. The shorter a waiting period, generally speaking, the higher price policy will be so here is a fun little strategy that can save you money...

Purchase a policy that has a 90 to 120 day waiting period. I realize that is 3 to 4 months and many people can't afford to wait 3 to 4 months in order to start receiving benefits. The trick here is to save up yourself right now 3 to 4 months worth of living expenses and that may be cheaper than the extra expense of premiums you will pay over time buying a disability policy with a shorter payout period.

So there you have several tips, tricks, and techniques that just about anybody can use to make sure your bills continue to get paid even if you lose your job due to a sudden and unexpected illness. A little planning in advance can go a long way and save you a lot of heartache and misery.