May is Disability Insurance Month
Have you ever stopped and asked yourself what is your most valuable asset?
Your answer might be your home… or your car… or maybe even your health. But a better and more logical answer is: Your income.
No one ever likes to think about losing the ability to earn an income. What if you were hurt at work and couldn’t go back for several months? Or what about a car accident or illness that requires years of recovery? If you are the primary income earner and you suddenly have no income – how will you support your family and provide for their basic needs?
May is Disability Insurance Awareness Month (DIAM) and at Hometown Insurance, we have all the information you need to know about the importance of protecting your income.
Why Disability Insurance?
The risk of disability is greater than most employees realize. When you become disabled and lose time at work, your source of income is eliminated. You may even have extra medical expenses to deal with your disabling injury or illness.
The Social Security Administration (SSA) reports that one in four of today’s 20-year-olds will become disabled for 90 days or more before they turn 67 years old—and that a massive 68% of non-government workers have no disability insurance.
If you have an emergency fund that would cover 3-6 months of expenses, you’re already ahead of the game. But disability insurance can assure you still have an income coming in until you get back on your feet.
What Is Short-term Disability Insurance (STD)?
STD is a type of disability insurance coverage that can help you remain financially stable should you become injured or ill and cannot work. Usually, STD coverage begins within one to 15 days of the event causing your disability. The coverage allows you to continue to receive pay at a fixed weekly amount or a set percentage of your income.
STD typically lasts for about 10 to 26 weeks, although this varies by policy. When this STD coverage ends, long-term disability (LTD) coverage typically takes effect.
What Is Long-term Disability Insurance (LTD)?
LTD is a type of disability insurance coverage that pays a set percentage of your regular income after a specified waiting period. For example, if you’re covered under short-term disability (STD) insurance as well, the LTD insurance would kick in once the STD policy is exhausted, typically after three to six months.
If you become disabled for a prolonged period prior to retirement, LTD insurance protects you.
How Much Do I Need?
Start by adding up your monthly expenses. Then, add up what disability insurance you may already have, plus any savings. If the amount is less than your monthly expenses, you should consider buying more disability insurance. Use this handy calculator to help you determine the right amount of disability insurance.
Are you ready to get disability insurance? LTD policies are often offered through employers as part of a standard benefits package. The length of LTD plans varies; some may be limited to a period between two and 10 years, while other plans continue paying out until age 65.
While your employer may cover you with some form of company-paid disability insurance, often coverage is only partial and/or short-term. Purchasing a personal disability income policy from Hometown Insurance can help you cover any financial gaps that you may have with the added bonus that these benefits are paid to you and are not taxed.