Disability insurance is one of the most important decisions that you can make to help to protect your financial future and financial advisors, not just insurance agents, are recommending these products to their clients for just that reason.
That said, the decision to obtain the insurance and the choice of insurer to provide it is up to you. There are many different issues to consider, from monthly premiums to the type of coverage that is provided. That said, you shouldn’t let a little bit of homework stop you from purchasing this important coverage.
Consider the following figures from the Personal Disability Quotient risk calculator from the Council for Disability Awareness. A 35 year old man or woman who is nonsmoking has a 20 percent chance of being disabled for a period of at least three months during his or her working lifetime. That same individual has a 38 percent chance of experiencing a disability that will last for five or more years. Overall, the typical disability is 82 months in length.
The Council for Disability Awareness has also stated that fewer than 5 percent of cases of illness and accidents that lead to disability are work-related. This means that the rest do not qualify for workers’ compensation.
Individuals must consider how long they would be able to make their payments and cover their expenses if they were unable to work . Then, it’s time to come up with a list of questions to ask your agent to make sure that you’ll be purchasing the right disability insurance policy for you. Some of these questions should include the following:
• How much of your income will be replaced by the policy should you become disabled?
• Will bonuses and commissions be covered on top of the base salary?
• Will retirement contributions such as 401(k) be covered?
• Will the payout continue to increase as your income increases over the years?
• Will it increase with the cost of living?
• Is there a maximum amount of money that will be paid every year, regardless of what you earn?
