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Disability Insurance is one of the most underinsured areas for most people and can be a glaring hole in an otherwise healthy financial plan. Consider these statistics on disability insurance and you will see why:
According to a Social Security Administration report in 2007, 70% of the workforce does not have long-term disability insurance. That is despite the average American worker having a 3 in 10 chance of becoming disabled in their working lifetime. A study by the American Council of Life Insurers found that 35 year olds are 6 times more likely to become disabled than to die by age 65.
The best way to get disability insurance is likely either through your employer or an association, as they are usually cheaper to buy through. There are two basic kinds of disability insurance; Any Occupation where you are insured against being unable to work at any occupation that you are qualified to work and Own Occupation or “Own Occ” where you are insured for a specific occupation. Pricing depends on several variables including the occupation you work and the elimination period. The elimination period is the time between when a doctor declares you disabled and when the payments start coming. They usually come in 180 or 90 days with 180 days being the lower premium. Usually there is a cap on income and you must have an earned income to qualify for disability insurance. By getting the proper Disability Insurance in place, you are setting up your family to survive financially by securing a portion of the income you would lose by becoming permanently disabled.