When you’re young and healthy, disability insurance can seem like one of those work perks that’s nice to have, but not necessary. After all, how likely is it that you’ll be disabled an unable to work? There’s more of a chance than you probably think.

A quarter of today’s 20-year-olds will become disabled before age 67, according to the Social Security Administration1. If you’re ever in that situation and your paycheck stops, your rent or mortgage, car payment, and other bills will keep coming. Disability insurance ensures a stream of income remains intact so you can keep paying those critical bills. So, is disability insurance a good idea? Absolutely.

Here are several key things you should know about disability insurance.

How does disability insurance work?

How much do you make annually? If you multiply your yearly income by the number of years you plan on working, your income potential is substantial. In most cases, your ability to earn an income is your greatest asset, likely larger than the value of your home, your vehicle, and other large purchases combined. You insure your home and your car; doesn’t it just make sense to insure your greatest asset?

Disability insurance protects a portion of your greatest asset, your income, in the event of an accident or injury.

Do I need short-term or long-term disability insurance?

There are two main types of disability insurance: short term and long term. Short-term disability policies go into effect when you temporarily can’t work. It’s used when an injury or health issue prevents you from working for several weeks or months. Short-term disability insurance is typically offered through your employer and each employer will have different rules regarding your benefit.

Long-term disability insurance protects your income if you’re out of work for many months, years, or beyond. Because these policies aren’t meant to serve your short-term needs, they often have waiting periods of about 90 to 180 days, or until your short-term policy expires.

How much disability insurance do I need?

If you’re shopping for homeowner’s insurance, would you purchase a policy that only covered half the value of your home? Likely not. Most people would find it difficult to live on a fraction of their income, so aim to replace as much of your income as you’re able. The amount you’ll need depends on many factors, but you can get a rough coverage estimate using this disability insurance calculator.

How do I get disability insurance?

There are a couple of ways you can get disability insurance. If you work full time, many employers provide some level of coverage. While it’s a start, most employer-provided policies only provide coverage for around 50 percent of your salary. To supplement your employer’s plan or to purchase a long-term disability insurance plan, a financial advisor can help to review your financial situation and recommend the best fit for your needs.

To be used with form MN 992-STD, MN 992-LTD, MN 1096 SGSTD, MN 1096 SGLTD, ICC16.TT.DI.IIB.(0916), ICC16.TT.DI.FIB.(0916), ICC16.TT.DI.CAT.(0916), ICC16.TT.NCDI.(0916), ICC16.TT.GRDI.(0916), ICC16.TT.DI.PDB.(0916), ICC16.TT.DI.PDBO.(0916) or state equivalent. Not all contracts and optional benefits are available in all states. Disability insurance policies contain some features and benefits that may not be available in all states. The ability to perform the substantial and material duties of your occupation is only one of the factors that determine eligibility for disability benefits. These policies also contain exclusions, limitations and reduction-of-benefits provisions. Eligibility for disability income insurance, additional policy benefits, and qualification for benefits, is determined on a case-by-case basis. For costs and complete details of coverage, contact your Northwestern Mutual Financial Representative or your group plan administrator.

Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM) (life insurance, disability insurance, annuities, and life insurance with long-term care benefits)

1U.S. Social Security Administration, April 2021


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