Statistics show that your chances of being disabled for three months or longer between ages 35 and 65 are almost twice those of dying during the same period.
Yet you may overlook disability
insurance as part of your financial planning. Here's how to fill that gap and get
the right coverage to protect your financial well-being.
●
Scrutinize
key policy terms. First, ask how "disability" is defined. Some
policies use "any occupation" to determine if you are fit for work
following an illness or accident. A better definition is "own occupation."
That way you receive benefits when you cannot perform the job you held at the
time you became disabled.
●
Check the
benefit period. Ideally, you want your policy to cover disabilities until
you'll be eligible for Medicare and social security.
●
Determine
how much coverage you need. Tally the after-tax income you would have from
all sources during a period of disability and subtract this sum from your
minimum needs.
●
Decide
what you can afford. Disability insurance can be expensive. You may opt to
forego adding riders and options that boost premiums significantly. If your
budget won't support the ideal benefit payment, consider lengthening the
elimination period. Just be sure that accumulated sick leave and savings will
carry you until the benefits kick in.
