You Have a 25% Chance of Needing Disability Insurance
NEW YORK (TheStreet) -- Workers fooling themselves about the need for disability insurance is virtually an epidemic: 64% of wage earners believe they have a 2% or less chance of being disabled for three months or more during their working years. According to DisabilityCanHappen.org, the actual odds for someone entering the workforce today are closer to one in four.
Don't believe it? Consider that 61% of surveyed wage earners know someone who has been disabled and was unable to work for three months or longer, according to the site.
"For most people, the ability to earn a living is the most important asset they have," says Eric Reisenwitz, a senior vice president at Lincoln Financial Group. "To live better, you should consider preparing for the unexpected -- and one of the best ways to do that is to have disability insurance."
"Disabilities are behind a significant number of home foreclosures and personal bankruptcies," he adds. "The financial impact of a disability can be overwhelming and devastating, which is why you need disability insurance to protect your income as part of a comprehensive financial plan."expect to pay between 1% and 3% of your annual gross income for good coverage. Get long-term insurance. Short-term disability insurance typically covers between three to six months of coverage. But the average time disabled Americans remain away from work averages around 2.5 years, which is why you need to look at long-term disability insurance that can cover you for an extended period. Once you turn 65, most insurers end disability insurance, figuring Medicare coverage (and eventually Social Security) can pick up the slack. depending on your policy. Ask about payment caps. Some disability insurance policies cover you only a to a capped amount, with $5,000 per month being common (and taxable.) If you make $100,000 or more, that leaves a serious gap. Talk to your insurer ahead of time about coverage caps and options that work for your income level.
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