Do You Have Disability Insurance?

Yesterday, I wrote about the importance of having life insurance. And, probably, many of us have life insurance. But how many of us have thought about disability insurance?

I have from time to time, but I haven’t got it yet. However, I’m beginning to think that it might be a good idea. What if I get into a car accident and bust up my arms or hands so that I can’t type for weeks (or even months)? There goes 75% - 80% of our household income. And while having a good emergency fund would ease the situation, disability insurance would help out even more.

Disability insurance is about risk management. You may never suffer an accident that makes you unable to earn money — but there is still that chance. And Social Security disability benefits probably won’t cover it. So you’ll need to make up the difference.

Your coverage should be based on your monthly income, as well as the premiums you can afford. If you have a good emergency fund built up, you can take that into consideration as well when deciding on coverage. But remember, your emergency fund won’t do if you become permanently disabled. Consult a fee-based financial planner to help you get a better handle on your financial situation, and what you might need to maintain it if something untoward should happen to you.

image credit: U.S. government