Out of all the various kinds of insurance that a person can obtain, not many people consider purchasing disability insurance. This is most likely due to the fact that most employers provide some sort of disability coverage or worker’s compensation. Because of this, most employees feel that they will be sufficiently covered in case something ever happens to them. Other people may shy away from buying disability insurance because of the high cost. However, this type of insurance can play an important part in maintaining stability in your family in the event that you become disabled and are not able to work for an extended period of time.
Do Employees Need Disability Insurance?
In 20ll, the Social Security Administration published a statistic stating that the average employee over the age of 20 has a 30 percent chance of becoming disabled before they reach retirement age. Although most employers offer some form of disability coverage, the payout may be delayed for months and the insurance provider may give you the runaround in the hopes that you will give up on your claim.
There is also the option for workers to apply for disability benefits via Social Security. However, the average monthly benefit payment is around $1200. This may not be enough to cover the living expenses of an entire family in the event the primary financial provider becomes disabled.
How Much Does Disability Insurance Cost?
Most people who have inquired about buying disability insurance find that the cost is surprisingly high. According to the Employee Benefit Research Institute, it costs about $16.30 for $1000 worth of disability coverage under a group policy. Workers who choose to purchase disability insurance on their own will pay about $18.60 for $1000 worth of coverage and are subjected to a 90 day waiting period.
This may not sound like much at first, but when you stop to consider that life insurance only costs around 22 cents for $1000 worth of coverage. The reason for this high cost is because not many people are purchasing disability insurance and because insurance companies face the risk of having to make large long-term payments if you file a successful claim.
It may seem costly, but if you think of it as income protection insurance to ensure that you can provide for your family, in the unfortunate circumstance that you need it, the cost will feel well worth it.
Calculating the Odds
When it comes to deciding whether or not disability insurance, it is important to look at your own situation and determine how likely you are to become disabled. Factors such as job type, age and pre-existing health conditions should also be included in your deliberation. If you are the sole financial provider for your family, think about how your potential disability would affect your lives.