You love what you do, and it’s taken hard work to achieve what you have. Now you’re reaping the rewards—including your income. So what would happen if, due to an illness or injury, you were unable to work for an extended period of time, or perhaps the rest of your career? Where would the money come from to maintain your lifestyle, fund your retirement or grow your investment portfolio?
That’s where disability insurance comes in. It pays you a portion of your salary if an illness or injury prevents you from working. But as a high-income earner, coverage offered through work is typically not enough. It’s important to consider the following...
Understand how it works.
Disability insurance typically covers between 50% and 70% of your income. However, coverage at work generally wouldn’t include things like bonuses and would cap the amount of income covered. Do you know what that cap is, and is it enough to maintain your lifestyle?
Know what you have at work. Do you have short- term or long-term disability insurance coverage, or both? How long does it take before the benefits start? Is there a limit on the benefit period, such as three or five years? Make an appointment with your HR representative to find out.
Because the idea of income replacement is so tied with your other wealth strategies, this is a topic to explore with your trusted insurance or financial professional.
Term vs. permanent disability income insurance.
According to the CDC, 61 million American adults live with some type of disability. With such a large part of the U.S. population disabled, disability insurance can be a life-changing asset for millions of people. For those who aren’t exactly sure what disability insurance is, it is a form of insurance that provides you with a percentage of your income if an illness or injury prevents you from working and earning a living.
There are two main types of disability insurance: long-term disability insurance, which typically pays a portion of your lost income for anywhere from one year to your entire working life, and short-term disability insurance, which replaces a percentage of your lost income for a brief amount of time—typically, between three to six months.
You do not need a full time job.
You can get it, even if you're healthy.
It's not as expensive as you think.
The cost of disability insurance is generally 1% to 3% of your annual salary and depends upon a number of factors, including age, gender, current health status and occupation. For example, in general, the younger you are, the healthier you are. Disability insurance rates will likely reflect this. If your occupation requires hard manual labor, handling of dangerous equipment or hazardous conditions, disability insurance rates tend to be higher.
There are other factors that will impact the cost of disability insurance, such as the benefit period and amount, elimination period and more. It is important to explore all premium options when you’re searching for disability insurance because the cost will depend on your specific situation.
Ask a professional.
There's no better way to move forward with purchasing disability income insurance than to reach out to a qualified professional. The Hanna Agency has one endeavor, and that is to educate people about their choices. We are not trying to sell you insurance. However, we are able to, under certain circumstances, to do so, if that is what you want.
There are many ways to reach out to us. The fastest might be using the form below:
