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Prolonged unemployment from illness or injury can jeopardize a person’s lifestyle and long-term savings. Long-term disability income insurance offers paycheck protection—providing cash to the insured to meet expenses such as mortgage payments, rent, or utilities. It also can pay for training or other assistance needed for one to return to work.
Disability income insurance may be provided by an employer as a group benefit or it may be purchased as individual insurance. An individual policy provides protection for as long as you continue to pay the premium. Group coverage lasts only as long as you are employed (or a member of the group).
There are several public programs that provide support if you become disabled, including Social Security. Knowing your eligibility for disability benefits from your employer, the government, or other programs is an important first step in deciding whether to purchase individual disability income coverage. Another step is to assess sources of income that may be available to you: a spouse’s income, short-term emergency savings, investment income, or family help. And finally, you should do a careful analysis of your most pressing financial obligations.
If the total of these benefits is insufficient to meet your living expenses under a disability, or if a disability would seriously diminish your long-term savings plan, then you may consider buying an individual disability income insurance policy. Most companies will review your medical and financial history and consider what other benefits are available to you before issuing a policy. If you are already covered by other programs, an insurer may offer limited or modified coverage. |
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