Finance Quick Answers
How do I know if I need disability insurance?
Though you may think it highly unlikely that you will ever become disabled, either on the job or outside of work, you are mistaken. According to the Health Insurance Association of America, at age 40, for example, you have a 19% probability of suffering at least one disability lasting more than 90 days.
Even if you collect from workman’s compensation and
government programs such as Social Security and
Medicare, you probably will not receive enough to live
comfortably. Individual long-term disability insurance
is crucial. If you become disabled you can receive up to
80% of your regular salary.
Read the contract carefully for the definition of disability, exclusions, the payment amount, payment caps, and how long the policy will pay. Consider policies that cover only your working life. The policy should refer to your own occupation and cover partial disabilities. A longer waiting period will result in lower premiums.
Sandra McKinnon, Consumer & Family Economics Specialist, University of Missouri Extension
Cynthia E. Crawford, Ph.D., Consumer & Family Economics Specialist, University of Missouri Extension
Last update: Monday, July 28, 2008