According to recent studies, a person is three times more likely to need disability coverage than you are to die and need life insurance before their 65th birthday. This should illustrate the importance of buying disability insurance. However, most people avoid disability insurance and don’t deem it to be a necessary expense. Why is this the case?
In general, it has to do with confusion more than anything else. The average person doesn’t know the difference between life and disability insurance. He/she goes with what is assumed to be correct or doesn’t buy at all.
If this is something you may be wrestling with, it’s time to do your research and understand what’s important with disability insurance.
1) LOCATE A GOOD INSURANCE AGENT
In most cases, you want to go out and find a quality independent insurance agent. This can be done using a quality site such as the one found here or look at other options around you. The premise is to locate a top-tier insurance agent that can help locate multiple providers. It’s important to have a collection of quotes before weighing them against each other.
2) 60% of Your Current Pay is about the most an insurance company will replace.
Your disability policy should be set at 60% of your current pay (before taxes). This means you can take home that amount if something were to go wrong. But, if your budget only affords a smaller policy, some coverage is better than no coverage. Plus, there are disability income protection policies that return all your premiums at age 67, which you can annuitize and turn into a private pension, guaranteeing an income you cannot outlive.
3) Choose the disability insurance company wisely.
Ideally go with a “mutual insurance company” that puts the policyholder first. Policy design with the correct riders is very important, take your time and understand your policy, don’t go with those who are new to the block because it may lead to complications down the road. If possible, choose a credible insurance company that has a history of paying claims and have a reputation to maintain. It’s the best way to get the right policy and know you’re backed by those with economic power.
4) Policy Should Cover Your Line of Work
Whatever your occupation, the policy should protect your professional explicitly. This ensures there is no backtracking in the future and everything is customized to your needs. One thing to note with disability income protection, the rating depends on the insured’s profession at the time the policy is issued, meaning if one works in a more hazardous line of work later on in life, the policy typically covers the insured at a lower premium cost. It is advantageous to plan ahead, get an income replacement disability income policy when someone is in good health and an occupation where they can take advantage of low premium rates.
5) Assess Requirement for High-Limit Disability Insurance
This will vary, but in most cases, it is reserved for professionals such as athletes or famous surgeons. Certain insurance companies have the ability to customize policies to meet unique situations.
In conclusion, you want to take the time to analyze these details and make sure they are in line with your needs.