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If you’re looking for the cheapest disability insurance you can get, it’s essential to shop around and compare quotes. You may find that your current insurer is cheapest, but that can change, so check roughly once a year.
No matter who your insurer is, we can help you save on your insurance policy.
Your most valuable asset isn’t your house, car or retirement account. It’s the ability to make a living. Disability insurance pays a portion of your income if you can’t work for an extended period because of an illness or injury.
The chance of missing months or years of work because of an injury or illness may seem remote, especially if you’re young and healthy and you work at a desk. But more than one in four 20-year-olds will experience a disability for 90 days or more before they reach 67, according to the Social Security Administration.
One reason people shrug off the risk is they think about worst-case scenarios, such as spinal cord injuries leading to quadriplegia or horrific accidents that result in amputation. But back injuries, cancer, heart attacks, diabetes and other illnesses lead to most disability claims.
When building a financial safety net, many people look to protect against the unknown with life insurance and health insurance. But your ability to earn income is your greatest asset and is crucial to any financial plan; if you’re unable to work, how do you plan for the future or meet your immediate needs, like paying bills?
Disability insurance can help. It’s income protection that keeps money coming in when you can’t work due to illness or injury. Disability insurance comes in long-term, and short-term versions, and the Social Security Administration also provides disability insurance. Long-term disability insurance is often the most overlooked.
Disability insurance is like insurance for your paycheck. When you’re unable to work, disability insurance can replace your income stream to make sure you can put food on the table, your basic necessities are met, and you can maintain your lifestyle so it never changes in any unforeseeable circumstances. The benefit payment from a private policy is tax-free (employer plans may be taxed) and pays out for a certain period of time, as outlined in your policy.
The type of disability insurance you have determines some of the different guidelines and features, like how long the policy will pay.
Disability insurance isn’t a purchase you make often, so you may not know where to start or how to get disability insurance quotes.
Consider buying a policy if you don’t have any or enough disability coverage at work or are self-employed. Employer-sponsored disability insurance usually pays only a portion of your base salary, up to a cap. It’s a good idea to supplement that coverage if your salary far exceeds the cap or you depend on bonuses or commissions.
An insurer will consider other sources of disability insurance to determine how much coverage you can buy. Generally, you can’t replace more than 75% of your income from all the coverage combined, Hoffman says.
Buying your own policy lets you:
Customize the coverage with extra features, such as annual cost-of-living adjustments
Choose the insurance company with the best offerings
Keep the coverage when you change jobs. Employer-paid coverage ends when you leave the company. (You might be able to take the coverage if you pay the full premium for disability insurance offered through the workplace.)
Control the disability insurance. The coverage stays intact as long as you pay for it. But employer-sponsored coverage will end if the employer decides to stop providing disability benefits.
Collect benefits tax-free if you become disabled. If the employer pays for the coverage, you must pay taxes on the benefits.