In Case of Emergency

Three in 10 people will need it, but many won’t have it. Do you?

  • By Jocelyn Black Hodes, DailyWorth's Resident Financial Advisor
  • July 11, 2013

How does disability insurance work?

Disability insurance replaces some or all of your income when you can’t work because of an illness or injury. Short-term disability insurance can cover all or most of your income for three-six months, while long-term disability insurance can cover 40-80 percent of your income depending on the type of policy you have, until you are capable of returning to work. 

What are the most common reasons people get it?

Most absences from work are actually due to illnesses. The most common reasons for long-term disability claims include cancer, heart disease, diabetes, arthritis, back pain, mental illness, and digestive and neurological disorders. Only 10% of long-term disabilities are due to injury.

Should I wait until I have a family to get it?

According to research cited by the Social Security Administration, a 20-year-old worker has a 3 in 10 chance of becoming disabled before retirement age. With those odds, disability insurance is a pretty good bet. And it’s easier and less expensive to get it when you’re young and healthy. If you’re thinking of getting pregnant, make sure you have short-term disability in place before you do, so you’re able to get payments while you’re out on maternity leave to cover lost income. (Maternity is the most common reason for short-term disability claims.) If you try to get it after you’re pregnant, you either won’t be able to or the insurer will exclude your pregnancy as a covered disability. 

Am I already covered? 

Many companies automatically cover employees, but typically only for short-term disability. 

Some employer plans allow employees to buy additional coverage at a discount with minimal or no evidence of insurability, which is a huge advantage. But group benefits have limitations. Some professional associations also offer coverage at a discount, but again, it may be limited. 

Go to page 4 for more on what you should know before you buy disability insurance. 

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