Lots of New Year's Resolutions have to do with money: saving it, earning it, spending it...but not many have to do with protecting it. The problem is that most people only think about money after they get it, and forget how they got it: with a paycheck.
Your paycheck is your most valuable asset, not your bank account. But what happens if you can't earn a paycheck anymore? What happens to all your resolutions?
Disability insurance protects your paycheck. If you're sick or hurt and can't work, you can still get paid with disability insurance. Your family can still buy food, pay rent, and keep the lights turned on.
Do I Really Need Disability Insurance?Think about it this way—you have a greater chance of being disabled than you do of dying prematurely. Modern medicine has made many diseases treatable, if not curable—but there's no cure for accidents.
Let's say you slip and fall on the stairs at home and hurt your back. You can't work, but since the accident happened at home, you can't collect worker's comp. Does your family have enough cash on hand to survive the days, weeks, or even months you can't work?
Tips for Buying Disability Insurance
- Check on your coverage from work. If your employer offers disability insurance, take a look at the policy amount, type of disabilities covered, and waiting period. Most employer-sponsored plans offer minimal coverage ($10,000 or less) and they may only cover short- or long-term disabilities (but not both).
- Decide on a waiting period. All private disability policies have a waiting period. A longer waiting period will cost less than a shorter waiting period. Be sure you price out 30-, 60-, and 90-day waiting periods to get the most for your money.
- Decide how long you want coverage. You can choose how long you want to be covered. It's a good idea to cover yourself until retirement. It's possible to buy lifetime coverage, but these policies are usually prohibitively expensive.
- See if your life insurance policy has a disability rider. If you don't have enough money to pay for a private disability policy, you may be able to use your existing life insurance policy to cash in. Some policies have optional riders that allow you to access the death benefit in the case of a disability. It's worth looking into if you already own a policy.
This New Year's, protect your income by protecting your paycheck. Disability insurance can make all the difference for your family if you're hurt or sick and can't work.