The Case for Disability Insurance

Most of us wake up each day not thinking today is the day something tragic will happen.? Thankfully so, as if we all had that mentality we’d be walking balls of anxiety.? That said the fact of the matter is that although I don’t want us going around clogging our brains thinking of tragedy, the prudent thing to do is protect, as best we can, against said tragedy doing more damage than it needs to.

Now, most of us are trained that once we start “adulting” we should be looking at some form of life insurance, and that is a good thing.? Sadly though, not many of us prioritize protecting ourselves and our families against a disabled event negatively affecting our finances and lives.? I’m not quite sure why that is the case, but for the rest of this blog, I will make a compelling argument that you should at the very least be addressing it in some fashion.

Probability

Let us start by addressing the probability of tragedy striking.? The likelihood of a 20-year-old dying before reaching the age of 65 is 17%.? That is a real percentage naturally, and almost all of us go out of our way to purchase insurance to protect against this decimating our family’s finances.? However, when compared to the disability statistics that ain’t nothing!? The chance of a 20-year-old having a disability lasting six or more months before the age of 67 is approximately a whopping 30%!? Thus, you are almost twice as likely to have disability strike your household than you are an untimely death.

Considerations

The first part to understand is simply the risks of tragedy striking.? Once you understand that you can start to make an informed decision on whether it is worth protecting you and your family against this risk.? For instance, maybe your spouse’s income is not paramount to your family’s finances and so you opt not to pay to protect that revenue stream.? In this circumstance, I would understand that decision.? However, what if you are the sole or primary breadwinner, like in my family?? Well in that situation if for instance, I got disabled it would be a complete financial mess if I couldn’t earn an income anymore.? I have 3 kids, 2 dogs, and a wife who has been out of the workforce for a decade now so even if she could get gainfully employed we would be hard-pressed to come close to our current standard of living.

Now, the other thing to consider is your personal finances.? Let’s say I am 55 with enough money saved to retire.? In this circumstance, you can easily make an argument that you don’t have an insurable need that warrants paying to protect against a disabling event.? There are certainly other situations and thoughts to consider, but the point is that they should be discussed and considered rather than brushed under the rug.

Remedy

The good news is that this exposure is easily remedied.? Simply put, there are disability insurances that will replace your income with funds during your working years that should allow you to stay afloat.? Even better news, if offered through your employer via a group disability plan these premiums can be rather nominal.?

Now, what if your employer doesn’t offer any disability insurance and/or it only covers a fraction of the income you need replacing?? In both cases, it is prudent to look at a stand-alone disability insurance policy.? The good news is they are very customizable and are portable regardless of where you work, with additional benefits you can’t get through a work disability policy.? The bad news, and one of the reasons I suspect more people don’t purchase it, is that they aren’t “cheap” especially when being compared to group plans or term life insurance.

Now, naturally, you must consider why they aren’t cheap, which is they are much more frequently used than other types of insurance.? This goes to tell you the risk and exposure is real.?

Give a look

Now that the case has been made, there is a lot to consider when reviewing your disability coverage.? We are well versed here at Diversified to give unbiased guidance to at the very least help facilitate and address this very problem.

I’ll write more later on understanding disability policy features but for now, awareness is the first step.? As always stay wealthy, healthy, and happy!