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Disability Insurance

The Need. It’s easy to overlook disability insurance, but it’s probably more important than life insurance. It’s also more expensive. Therefore, it’s important to carefully calculate the amount of disability insurance you’ll need. For example, disability payments are not taxable, so you’ll need less than your monthly income. If you didn’t have to go to work, your expenses (such as transportation) would also be less.

Costs. While you may want to save high premium costs by providing for a relatively low monthly payment, it’s best to buy insurance that pays you at least until age sixty five.

The Fine Print. Disability policies are also tricky in how they define “disability”. Here again, your independent agent can help you and offer you several types of policies. Take a policy that has the same waiting period for disabilities caused by accident or illness. Try to get a policy that is guaranteed renewable and noncancelable. Many other factors, such as waiver of premiums while you are disabled, cost-of-living clauses, and the policy on intermittent disabilities, will come into play.

Waiting Period. With disability insurance, the “waiting period” between the onset of the disability and the beginning of payments has the same effect as a deductible. The longer the waiting period you choose, the lower the premiums.

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