Most of us already know the importance of life insurance, and, a lot of people don’t think they need disability insurance, because they mistakenly believe disability is something that would never happen to them.
The fact is, disability can happen to anyone at any time. We tend to think of “disability” as perhaps a terminal illness or an injury so severe that we need a wheelchair. So we tend to tell ourselves “I eat healthy and most of the time suffering a disability certainly does not mean you were careless with your health or took unnecessary risks.
Disability doesn’t always mean a permanent condition, either. An illness or injury that persists for six months may not entirely ruin the rest of your life, but it can definitely ruin your finances. It helps to remember that disability insurance is actually income insurance. You aren’t necessarily insuring your entire future against a disability; you are insuring the income you get from work in the event that you cannot work for a period of time.
So who needs disability insurance? If you’re already retired and living on a pension or retirement savings, you probably don’t need it. If you’re very low income, you might find that Social Security offers an adequate safety net. Also, most people do not insure children or nonworking spouses, though if one spouse provides primary childcare it could make sense to insure them in some cases.
If, however, you and your financial needs are beyond what Social Security would cover in the event of disaster – then disability insurance is a necessity for you. This is especially true if your employer does not offer disability benefits, or the benefits offered are very limited.
How much disability insurance do you need? Most experts agree that you need a policy that will pay benefits equal to 50 to 70 percent of your annual income, and continue taking care of your family.