Have you ever thought about what you’d do if an injury or illness kept you from working? It’s not something we like to think about, but the unexpected can happen.
One day, everything’s normal, and the next, an accident or health issue could leave you unable to work for weeks or even longer.
Disability insurance can help in situations like this. It replaces all or part of your income if you can’t work due to illness or injury, so you can focus on recovering without worrying about paying bills or covering daily expenses.
This guide explains the basics of disability insurance—how it works, why it’s important, and how it can help you stay financially secure when life takes an unexpected turn.
What is Disability Insurance?
Disability insurance helps replace a percentage of your income if you can’t work due to illness or injury.
While no one can predict the future, having this coverage means you won’t have to stress about paying bills or making ends meet if something unexpected happens.
Short-Term vs. Long-Term Disability Insurance
There are two main types of disability insurance: short-term and long-term.
- Short-term disability insurance provides coverage for a few weeks to a few months if you’re temporarily unable to work due to a non-work-related illness or injury. Policies typically pay 40-70% of your salary during this time, though benefits and coverage can vary.
- Long-term disability insurance kicks in when you’re out of work for a longer period, usually six months or more. It’s meant for serious health issues or injuries that might keep you from working for years, or even permanently. This coverage typically replaces up to 60% of your salary and can last for several years or until retirement age, depending on the policy. As with short-term coverage, benefits and terms can vary.
Why is Disability Insurance Important?
Did you know that an insured worker born in 2000 has a 25% chance of becoming disabled before reaching retirement age?
That’s a statistic that hits home for many people, but many don’t realize how easily a sudden illness or injury could put their finances in jeopardy.
Things to Consider When Choosing Disability Insurance
Here are the key factors to look at before choosing a policy:
Coverage Amount
Start by deciding how much of your income you want to replace. Short-term policies typically cover up to 70% of your salary, while long-term policies typically cover up to 60%.
Think about how much you’d need to maintain your expenses while recovering.
Waiting Periods
Every policy has a waiting period (also known as an elimination period), which is the time before payments begin.
- Short-term policies: These usually have a waiting period of 0-14 days. They’re designed for temporary needs, like recovery from surgery or a short-term injury.
- Long-term policies: These usually have longer waiting periods, ranging from several weeks to months. They’re meant for serious or long-term disabilities.
Duration of Coverage
Policies vary in how long they’ll provide benefits:
- Short-term policies: Typically last up to two years and are suitable for temporary needs when you expect to return to work soon.
- Long-term policies: These can pay benefits for several years, until a certain age, or until retirement. They’re ideal if you’re concerned about long-term illnesses or disabilities that might keep you out of work for an extended period.
Keep in mind that longer coverage periods usually come with higher premiums, so consider your budget and the level of protection you’re comfortable with.
Additional Features
Many policies offer optional features to enhance your coverage, such as:
- Cost of Living Adjustment (COLA): This option adjusts your benefits for inflation, so your payouts won’t lose value over time.
- Return of Premium: This option refunds part of your premiums if you don’t use the insurance during the policy term.
Why You Should Work with a Trusted Advisor
Choosing a disability insurance policy can be overwhelming, with so many options to consider. A trusted advisor can simplify the process by helping you understand your choices, find the right coverage, and avoid unnecessary costs.
They’re also there to support you if you need to file a claim or update your policy later. Working with an expert ensures you make informed decisions and stay prepared for the future.
Disability insurance protects your income, so it’s important to take the time to find a policy that fits your needs.
At TSL Insurance Group, an experienced insurance agency serving Lafayette, Baton Rouge, Franklin, Abbeville, and Lutcher, we understand how important it is to protect both your income and your peace of mind.
Reach out to us today, and let us help you safeguard the income that supports your family and your future. We’re proud to serve our communities in Lafayette, Baton Rouge, Franklin, Abbeville, and Lutcher with the personalized care you deserve.
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