Why You Need Disability Insurance and How to Save on It

Here are a couple piece from Bankrate. The first gives some good reasoning on why you need disability insurance while the second offers some suggestions on how to save on it. First, some thoughts on why you need it:

For most people, their most important financial possession is their stream of income, meaning their job. Now wouldn't it be nice if there was insurance to cover that? And there is -- disability insurance. Disability insurance saved my life. When I was 48, I came down with tuberculosis and the insurance company started delivering to me $3,000 a month, which was a lot of money then, and it came tax-free.

They go on to provide a few more details:

Yes, [people often] get disability insurance from the company, but that's always limited. I believe that people should have their own disability policy, and that it should be "own occ," meaning it's your own occupation. You cannot do the profession that was interrupted. If a dentist becomes disabled, he shouldn't have to go to a restaurant and become a waiter. I believe that the policy waiting period (before you make the claim) should be a significant length of time. There are waiting periods of 30, 60, 90 and 120 days. The longer the waiting period, the lower the premium. It's like a deductible. You are generally limited to 60 percent of your salary in the amount you can apply for. And when you pay for your own disability insurance, the money you receive is not taxable to you, where the money you receive from your company's disability policy is taxable to you if the company is paying for it. The number-one star insurance is disability.

And here's the biggest money saving tip I've seen when it comes to saving on disability insurance:

Elimination period is the amount of time that must elapse before your benefits kick in. The longer you can go before taking benefits, the more you can save on premiums.

I've said it before, but it's worth repeating:

"Yeah, it's pricey insurance, that's for sure. But think about it -- why is it pricey? Because it covers a hugely valuable asset (your income) and there's a decent chance (at least better than many other insurances you pay for) that you'll need it. These are just the reasons you shouldn't be without it."

For more on why disability insurance is a must for us all, see these posts:

• Why You Need Disability Insurance

• Why I Buy Disability Insurance

Comments

[Jerry]

These are great tips for saving on disability insurance, and your logic is impeccable. It leads the reader directly to the conclusion that, while relatively expensive, this coverage is absolutely worth having.
Nice work!
Jerry