What You Should Know After Getting Disability Insurance

Getting disability income insurance is a big component of long-term financial security. That’s because disability insurance protects what’s likely your most valuable asset: your ability to earn an income. With your income insured, you can rest easier knowing that if a disability prevents you from working, you’ll still have money to meet your needs today while still funding your future goals.

WHY DISABILITY INCOME INSURANCE IS SUCH AN IMPORTANT PIECE OF A FINANCIAL PLAN

The most important part of any financial plan is income — everything else builds from there. Your income pays for the things you need today and funds what’ll you need in the future. Losing your income, even for a few years, can have a huge impact on your long-term financial goals. Without disability insurance, a disability may leave you dipping into savings that you set aside to grow for decades or more.

Disability insurance helps you keep the status quo as much as possible if your ability to work changes because of an accident or illness. Importantly, in addition to covering your daily expenses, disability insurance can also help keep you on track to fund your future goals. That’s what makes disability insurance a critical safeguard in a financial plan.

SOME THINGS TO KNOW ABOUT YOUR DISABILITY INCOME INSURANCE POLICY

Disability income insurance tends to be straightforward. If you are sick or hurt and can’t work, your policy will pay you a monthly benefit. But here are a few things to know if you ever need to use it.

What counts as a disability? Disability insurance covers you when an injury or illness prevents you from working, and health reasons are more common than you might think. Musculoskeletal and connective tissue disorders, along with cancer, account for roughly 40 percent of new long-term disability insurance claims. Heart conditions, injuries and some mental illnesses are also covered via long-term disability.

What if I can do some, but not all, of my work tasks? Disability claims aren’t always all or nothing. There are frequently cases where someone can still work, but in a reduced capacity. In such a case, that person may be eligible to file a partial disability claim, which would replace a portion of lost income.

What’s the difference between short- and long-term disability? Short-term disability (typically offered through your employer) will cover you in the initial weeks and months of your disability. Long-term disability insurance covers you if your disability lasts for more than a few months.

Be aware of your coverage when you change jobs. Many people get some disability insurance through work. It’s a great benefit. But there can be a few drawbacks. One, most work policies only cover a portion of your income, perhaps 60 percent. In addition, if you change jobs, you may lose the coverage you have through work. With a private policy that you purchase on your own, you don’t have to worry about losing your coverage when you change jobs.

What’s the benefit waiting period? For long-term disability, this is how long you’ll have to wait before your benefits kick in. Let’s say you become disabled on March 1. If your policy has a 90-day waiting period, your benefits will start 90 days later, just before June 1. Short-term disability is designed to cover your costs prior to long-term benefits kicking in.

Your monthly benefit. Once your policy begins paying benefits, this is the maximum amount that you’ll get each month until you are no longer disabled, or when you reach your maximum benefit period (typically in your 60s).

YOU CAN REST A LITTLE EASIER

Disability is more common than you might think, so you’ve checked a big item off your financial security to-do list. Now, if you’re ever out of work because of a disability, you’ll continue to get regular income every month — and that’s one less thing to worry about.