There are three perfect times to purchase disability insurance:
- When you’re young
- While you’re healthy
- When your employer offers it
Obviously, when you’re young and in good health, your chances of qualifying for disability insurance are at their best. It’s also when the cost of purchasing this coverage is the least expensive. Once you start getting older and having health issues, your rates will go up and you may even find yourself ineligible to receive the benefits.
It actually makes the most sense to purchase disability insurance coverage when you are younger. The longer you wait, the more expensive it’s going to be. If you put it off until you’re older, you may develop a health condition that excludes you from this coverage altogether.
Bottom line: Don’t wait.
When your employer offers disability insurance coverage, you should absolutely take advantage of it. Employer coverage will be the least expensive option available to you. Corporations get discounts because they offer coverage to larger groups of people. Plus, you often won’t even need to submit a health examination or even fill out a questionnaire to get accepted. Don’t let this opportunity pass you by.
Whatever you do, don’t allow yourself to believe the little voice in your head that says, “I won’t ever become disabled.” Sure, that’s what everyone thinks. Unfortunately, I know so many people on a disability claim right now who all said the same thing. We never think it’s going to happen to us.
Consider this: Approximately 1 in 4— just over 25%— of young professionals will face a disability that takes them out of work for a year or more.
Take that in for a moment. One out of every four people is a pretty big number. The chances are pretty large that you might find yourself unable to work at some point in your life. What are you doing to ensure you can survive an unexpected injury or sudden health emergency that takes you out of the workforce for an extended period of time?
Keep this in mind: Disability insurance isn’t about gambling on whether or not you’ll need it. It’s about removing the risk that you’ll be without an income at some point in your career.
People often assume that the government will take care of them if they get disabled. However, only a third of those who apply for social security disability benefits actually receive them. Those who do qualify only receive about $1,200 per month, which is a fraction of what most need to cover their bills.
Even if you have coverage through your employer, that coverage is often taxable and can reduce your potential payouts to about 40% of your monthly salary. Plus, in most cases, that coverage isn’t portable. So, if you change jobs at any point in your career, your coverage will end. You’ll have to reapply for it at a later time when you’re older and likely to have developed a few health problems along the way.
Sometimes we put our hopes in a savings account, but that’s a very short-term solution. Most emergency accounts only have 6 to 12 months’ worth of available funds. Once unplanned medical bills and copays start draining your personal accounts, you may find you have nothing left to cover expenses beyond that first year. Even worse, when your roof leaks or another emergency issue springs up, that rainy day savings account won’t be there to bail you out.
So, if you’re young and healthy and you don’t currently have a disability insurance policy, now is the best time to sign up.
The worst thing I see happen is when someone goes to the doctor and gets a bad health report and only then decides they need disability insurance. That’s the worst possible time because that doctor’s report will disqualify you for disability insurance. Simply put, the next time you visit the doctor could be the last time you’re insurable for disability coverage.
For more information speak to your financial advisor or employer’s HR department or contact me at [email protected]