Your most valuable asset is your ability to earn an income. Have you ever thought about what would happen if you experience a serious illness or injury? How would the loss of your income impact you?
In addition to your day-to-day living expenses, a disabling injury can also lead to additional expenses, such as increased medical and household costs. If you’re like most working Americans, your savings account isn’t nearly big enough to see you through a disabling injury or illness. Even the loss of one paycheck, coupled with medical bills, could be enough to dig you a financial hole that could take years to climb out of.
To protect yourself against financial hardships caused by an in ability to work you need to consider a personal disability income insurance policy. Whether you are married or single, with children or without, a disability insurance policy will help you keep your head above water and protect your ability to make ends meet.
When considering disability insurance, here are some questions you need to ask before choosing a policy.
What Type of Disability Insurance is Best for Me?
Short-term insurance which generally begins anywhere from one to two weeks following the start of your disability with a benefit period of up to two years, depending on your policy; and Long-term insurance which may have a waiting period of as much as six months, and can have a benefit period of anywhere from a couple of years through the rest of your life. It is important to know what your policy covers before you need it.
How Does This Policy Define Disability?
Some policies pay benefits if you are unable to perform the duties of your regular occupation, while others pay only if you can engage in no gainful employment at all. Some policies also pay benefits if you become ill or injured and are unable to earn a specified percentage of your income. Understanding how a disability is defined will help you to select a policy that best suits your needs.
How Much of My Income will This Disability Policy Replace?
This amount varies by policy, but a policy that pays 50 to 60 percent of your monthly salary (not including bonuses or commission) is the most common and most affordable option. It’s best to first evaluate your other sources of income to determine the amount of disability income coverage that you will need.
Will My Disability Benefits Keep Up with Inflation?
Adding optional COLA coverage to your disability policy means that the coverage you purchase today will keep up with the pace of inflation during the lifetime of the policy. This is an important consideration, especially if you are a younger worker, and a disability could mean a lifetime of being unable to work.
Do I Have to Pay Taxes on My Disability Benefits?
Some disability benefits are taxable and some are not. If you are buying your own disability policy with after-tax dollars, the benefits will generally not be taxable. If your employer is providing the disability Insurance, it is possible that your benefits will be taxed. It is always best to consult with a tax professional to answer this question definitively before purchasing any insurance.
My Employer Provides Disability Insurance as Part of My Benefits Package. Isn’t that Enough?
While your employer may cover you with some form of company-paid disability insurance, often coverage is only partial and/or short-term. Be sure you review your employer-provided insurance carefully before making a decision. Purchasing a personal disability income policy from Roper Insurance & Financial Services can help you cover any financial gaps that you may have with the added bonus that these benefits are paid to directly you and are not taxable.
If you need help with thee or any other insurance questions, we at Roper Insurance are happy to help you answer these questions and help you understand what you need to know about any type of insurance before you buy. We can help you select personal insurance coverage that complements your financial plan and provides the security that you need. Call us today at (303) 721-1145 to learn more about all of our disability, life and health insurance solutions.