Assessing Your Need for Disability Insurance

When determining your need for disability insurance, consider how long you can go without income if you are unable to work.

The basic idea behind insurance is to protect something of great value, such as a car, a home, artwork, or, of course, our lives.

Assume you or a breadwinner has been seriously injured and is unable to work for an extended period of time. How will your family cope while you’re away? If you become ill or injured and are unable to work, disability insurance will replace a portion of your income. Every employee should have disability insurance.

“I believe that the need for disability income insurance applies to every income earner, even people with no dependents,” said Steven Weisbart, PhD., Chief Economist with the Insurance Information Institute. “This is because when one is disabled many expenses continue and have to be paid somehow.”

Some businesses buy short-term and/or long-term group disability insurance in order to provide coverage to their employees. While anyone can apply for disability insurance on their own, having employer-sponsored coverage has advantages. For example, if a person is covered under her employer’s group plan, she does not need to demonstrate insurability. The only requirement for group plan eligibility is employment with the sponsoring company.

This coverage typically pays about two-thirds of a worker’s pre-disability income, and compensation is only paid when the illness or injury is work-related. The vast majority of long-term disability cases are not related to work.

Qualifying for disability benefits through the Social Security Administration is not guaranteed, and benefits are not particularly generous, as they are determined by a worker’s salary and work history. So, disability insurance is a logical choice to better protect your career, future earnings potential, and family.

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