Disability
Insurance Protects Your Salary
Most
people never even think of buying disability insurance. Unfortunately,
one
in seven workers will be disabled for a period of five or more years before
they reach age 65. Far fewer people will suffer a house fire or death.
A
common misconception for many is that they're already covered in case
of
disability. But many employer-sponsored plans or government plans will only
pay for a short period of time or a smaller amount than your wages.
Canada
and the US have similar plans to protect its citizens. So even if
you do have some coverage,
having enough cash to pay your bills until the insurance kicks in could
be a problem. You'll not only want to consider how much income you'd
be getting,
but when you'd receive it and for how long.
How
Much Disability Insurance Is Enough?
The
amount of insurance that's advisable is different for everyone. It's not
as simple as taking what you currently earn and using that figure. Your expenses
can also change dramatically. So you'll need to estimate changes to both
income and expenses.
You
will spend less on some things. After all, if you're not working you
won't
need work clothes. Lunches at home are cheaper. And it might
be possible to get rid of that second car. Every case is different.
But,
new expenses can more than eat up any savings. While some disabled persons
are able to care for themselves, others require in-home nursing care
or even
a move to a nursing home. The healthy partner, if there is one, could
be too
busy working to complete all the household chores so non-medical help could
be required, too.
Why Would I Need Disability Insurance?
A
good place to start is to consider a "worst-case" scenario.
Take a look at your finances and estimate what would happen if an adult
had a
stroke and it was necessary to move them into a nursing home. Include both
income and expenses. Estimates are fine. You don't need to be overly
accurate.
The goal here is to just get a feel for how much it would cost and how
much income would be needed to keep things going. Prepare a basic budget
with
the revised income and expense figures.
You'll
probably want to also do a scenario that's not quite so drastic, perhaps
where someone is disabled for a year or two. Under this circumstance you'd
expect that the disability income required would be significantly less.
After
you have some idea of how much coverage you're looking for it's time
to consider
what a policy will cost. Rates will vary widely. A number of factors will
affect the rates. Obviously, your age will have a difference. The premium
will increase if you need to begin receiving checks shortly after the disability
occurs. Do you expect payments for a certain period of time? Say five
years?
Or until you reach age 65? To find out what it costs, see Disability
Insurance Quotes.
Definition
of Disability Insurance
Another
major determinant of your premium is the definition of 'disabled'. Are you
disabled when you can't work at your specific profession? Or do you have
to be unable to work any job to qualify. For instance, if a surgeon loses
use of his hands, he's lost a significant income. But under some policies,
if he's able to work as a janitor, he's not considered disabled. For some
people taking a step down in income is no big deal. For others it's a disaster.
Back
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Ivon T. Hughes, The Hughes Trustco Group Ltd.
Online Insurance Broker - Get a FREE Quote TODAY!
Tel: (514) 842-9001 Email: info@trustco.ca Web: http://www.trustco.ca
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