Disability Insurance - Part 1

Disability insurance is used to cover the loss of your income of you should become disabled.

Disability insurance is used to cover the loss of your income of you should become disabled. That sounds simple enough, doesn't it? Do you need it? Yup, you do. If you are in a car accident and are out of work for six months, who or what is going to pay the bills? If you can tell me someone will take care of you forever should you become disabled, you don't need to read further. Perhaps you are relying on your spouse's income to support you during a disability. For the rest of you, start shopping for disability insurance.

This is a difficult call for workers because the odds are small that you will become disabled, but it can happen. Short-term disabilities are easy to self-insure. If you break your leg in a car accident, you may be out of work for six weeks, not six months. If you have two weeks of sick time, you'll only need to dip into your savings for four weeks of living expenses before you're back to work.

However, what if it's more serious? What if you have a broken back as well as the broken leg, and you need six months in a rehab facility so you can walk and drive again? Where will the dollars come from to cover your expenses? This is not a scare tactic, although that is not beneath me as a planner. I want to present the whole picture to you.

If you are permanently disabled, Social Security does kick in with some long-term benefits, but these are very small. If you work for a state or county government, you may already have disability coverage. Check it out!