What It Is
Disability insurance guarantees you a set monthly income (a percentage of your usual pay) in case a medical condition leaves you unable to perform your work duties.
Who Needs It Most
rely on one or both partners' paychecks to squeak by. If that's the case for you, get disability insurance. People in physically demanding and high-risk careers are also wise to get a policy. Most employers provide some kind of disability insurance coverage, but you may want to look for a supplement as well. The most common cause of short-term disability claims is pregnancy, though one in three people will be disabled for 90 days or more before they turn 65.
How It Works
Policies have different payouts based on whether you're out due to a short-term disability (say, an injury from which you'll recover, like a broken leg) or a long-term one. Long-term disability coverage is key -- at your age, if you get knocked out of work, you have decades in front of you that you'll need help funding.
Most companies cover up to 60 percent of your salary; with supplemental insurance, that number can rise to 80 percent.
Go to the Insurance Information Institute
for detailed information on disability insurance by type and state.
Questions to Ask Before Choosing a Policy:
- How much money would you need every month to support yourselves?
- What are the premiums of the policy you're looking at?
- How long would you be able to get by financially before the benefits kick in?
- What's the payout for short-term disability claims and long-term disability claims?
- Will the policy cover you if you're not able to work in your profession?
- How often do you have to "re-certify" your benefits -- each month or each year?
- Are absences due to mental health issues, substance abuse, or preexisting conditions included in the policy?
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