Why I Buy Disability Insurance

Of all the types of insurance available, the one I hear the least about is disability insurance. Why? I'm not sure, but I'd guess that it's a combination of people not thinking about it and (for those who do think about it) thinking that they won't need it. In reality, it's one of the most important types of insurance you can have.

My current employer doesn't provide disability insurance, so I have my own policy. On the back of my latest statement, they listed a couple stats on why people need disability insurance.

• 48% of all home foreclosures are the result of a disability.

• During the course of your career, you are three and a half times more likely to be injured and need disability coverage than you are to die and need life insurance.

Think about it this way: disability insurance protects your most valuable financial asset -- one worth millions of dollars in extra income throughout your lifetime. No other type of insurance (house insurance, car insurance, life insurance, health insurance, etc.) is as important (with the possible exception of life insurance -- which covers years of your salary) because of the amount it covers, and the impact on your financial life if your career is interrupted.

Maybe they should just rename "disability insurance" to "career insurance." Then people might realize how important it is, discover that they're much more likely to need it than other, more used types of insurance, and get covered.

What about you? Do you have disability insurance? Why or why not?

Comments

[Miserly Bastard]

I have it but it is provided through my employer. The reason most people dont buy it is because disability insurance is quite expensive.

[FMF]

MB --

Two responses to your comment:

1. I would guess that most people don't even know what disability insurance costs. They have no clue. Why? Because they haven't really thought about it -- and even if they have, they haven't taken the step to check into costs.

2. The cost of disability insurance is a function of: 1) the liklihood that you'll need it and 2) the value of what it's replacing. Since there's more of a liklihood that you'll need it than, say life insurance, and it's protecting your most valuable financial asset (your income) for years, maybe even decades, it's going to be more expensive.

The evil is in the details.

Some DI companies has their own definition of disability. That's what turned me off.

One of them says if you are able to get back to *any* work, then you are not entitled to claim for disability insurance.

In other words, if you were an M.D and after accident you can still flip burgers, you are not viewed as disable.

[John]

I was told that I wasn't eligible because of my history of depression. (Something about working at your job versus any job.) Has anyone else heard this?

[a]

you are 3 times more likely to use disability insurance than life insurance by age 65

[Sara]

Does anyone have any advice on reliable companies for disability? Even as expensive as it is, everyone I have ever known who has needed to actually use their disability insurance has had to get a lawyer involved to get the benefit. The insurance's doctors always seem to argue you aren't actually "disabled enough" to not work.

[No Debt Plan]

Where do you buy your insurance from? I can't seem to find a reputable source.