Long-Term Disability Coverage: Long-term disability insurance is the one type of insurance that most people believe they will never require. Nonetheless, according to Social Security Administration statistics, one in every four workers entering the labor force will become disabled and unable to work before reaching retirement age.
Even workers with great health insurance, a nice nest egg, and a good life insurance policy frequently fail to plan for the day when they may be unable to work for weeks, months, or ever again. While health insurance covers hospitalization and medical bills, you are still responsible for all of the expenses that your paycheck would have covered.
As part of their benefits package, many employers provide both short- and long-term disability insurance. This would be the best option for obtaining low-cost disability coverage.
If your employer does not provide long-term coverage, consider the following before purchasing insurance on your own:
- The best policy is one that guarantees income replacement. Many policies pay between 40% and 70% of your income.
- Disability insurance premiums are determined by a variety of factors, including age, lifestyle, and health. The cost is typically 1% to 3% of your annual salary.
- Read the fine print before you buy. Many plans have a three-month waiting period before coverage begins, a three-year maximum coverage period, and significant policy exclusions.