The number is stark: 30% of Americans between the ages of 35 and 65 will be disabled at some point in their lives, unable to work for at least three months.
You need protection, to support yourself and your family, if you are unlucky enough to become disabled.
Don’t depend exclusively on disability coverage from Social Security. About 60% of Social Security disability applications are rejected. And even if you get Social Security disability, don’t expect it to support your current standard of living. At a salary of $50,000 to $75,000 a year, Social Security disability would replace about 30% of income. The average Social Security disability benefit is just $1,130 a month.
Some companies offer disability insurance as an employee benefit. But this is available usually at larger firms, with few smaller companies offering these policies. There may be a very long waiting period. Or it may pay 50% of your salary, and you want more income protection.
It makes sense to get your own coverage, especially if you are moving into the age group where medical problems might develop into disabling conditions. What you need is a long-term disability policy, something that will provide economic support if the condition disabling you is a persistent one.
When you shop for a disability policy, make sure it has “own occupation” coverage. That means you can collect benefits if you are unable to do your specific job or participate in your particular occupation. Otherwise, you would be expected to take any available job. For example, a software specialist could be expected to work as a baggage handler, even if he is not used to physical labor and hefting heavy suitcases.
You want a policy that will pay benefits until you reach retirement age and qualify for Social Security.
You want a policy that had a renewal guarantee, even if your physical condition becomes worse.
You want a policy with an inflation rider, so the benefit keeps pace with the increases in the cost of living each year.
Take the biggest deductible , or waiting period, that you can afford. This will lower the premium because you are paying for your own expenses when you first become disabled. Try for a deductible of six months, when you pay your full costs. This means you will need an emergency savings account equal to six months of income. That reserve isn’t just good in the event of disability; it also provides a backup if you or your spouse or partner becomes unemployed.
