Everyone has the option to purchase disability insurance but many people overlook its benefits. Because they are typically healthy or they believe they have other options to fall back on, they see the insurance as unnecessary. Unfortunately, according to US News & World Report, individuals in their 20s could risk serious financial hardship for an extended amount of time if they aren’t protecting themselves from the risk of disability.
What is Disability Insurance?
Each month, a person pays a premium for their disability insurance. This money purchases coverage against the possibility that something should happen to change their mental or physical status and prevent them from working the same job or even working at all. During the time a person is away from work, if they have disability insurance, a portion of the regular paycheck is still collected.
Because a sickness or accident can be a tough situation in general, most people struggle with worry when it comes to their finances. Missing paychecks and ever-increasing medical bills create real problems that can sometimes prevent a person from getting better and draw out the time away from work. If a person has insurance, they can rest assured that at least a portion of the income is still going to be collected.
How Much Does It Cost?
The cost of disability insurance varies from one person to the next. It depends on the type of job someone does as well as their current income. Some insurance companies will replace different percentages of a person’s income. This is the main reason it is so important to look at all of the different options available. If an employer offers this insurance, it may be the most cost effective choice. For those that are self-employed or part-time workers, there is still the option to purchase the insurance privately. A common misconception is that disability insurance is something that most people can’t afford. In reality, a closer look at the average premiums tells a different story.
Does the Average Person Need It?
The biggest question people should ask themselves is what they would do if they were unable to work for a certain amount of time. Would they be okay without income for three months, six months, or a year? What if there were added expenses associated with a medical condition? The average person usually doesn’t have enough money around to handle their expenses for even a couple of months. To protect from the financial situation created by an accident or sickness, disability insurance really comes in handy, no matter what a person’s income is. For more information about disability insurance and how it works, sources such as moneytips.com are very helpful.
Before ruling out disability insurance, every individual should look at their options and get more information on the cost. The goal is to weigh out the monthly premium and the costs that could be incurred should something happen that would prevent someone from working for an extended amount of time.