Disability Insurance
What to Look For
Do you have enough disability insurance coverage? If you need to purchase private coverage, how can you get the most for your money? Have you neglected to protect what could be your most important financial asset? For many individuals, this is not the home or portfolio—it's earning power. This Financial Guide provides you with information to assist you in determining how much disability insurance you should have.
Even if your employer provides you with disability coverage, it's vital to examine the terms and conditions of that coverage, since it may not provide you with adequate coverage to meet your needs.
If you couldn't work, how long could you continue to pay your bills? Chances are, whatever employer-provided and government-provided coverage you have is inadequate, and you need to provide yourself with private disability coverage. Here are guidelines designed to ensure that you are adequately covered.
PLANNING FOR THE WORST-CASE SCENARIO
Many of us have life insurance, however very few of us have long-term disability coverage. Yet according to statistics, workers are more likely to sustain a long-term disability (one lasting longer than 90 days) than die at an early age. Long-term disability insurance is fairly expensive, and people tend to think that they will be protected by workers' compensation or other sources. However, Social Security, workers' compensation, and employer-offered long-term coverage are often inadequate
EMPLOYER-PROVIDED COVERAGE
If your employer provides long-term disability coverage—which must usually be paid for by the employee—it's a good idea to buy it. The premiums are probably discounted from what you'd pay for a private policy.
However, take a good look at what the employer-offered policy covers, and buy a private policy if you decide you need it. Many employer-provided group policies are inadequate in that they limit either the term of the coverage or the amount of benefits paid. For instance, benefits may last only a few years, or benefit payments may represent only a small part of executive salaries.