“For most of us, the ability to earn an income is their only equity,” Tassey said. “If you can’t earn a living, your life is crushed financially. Often times disability is referred to as a living death. You can watch everything fall apart.”
Both Moore and Bucci recommend disability insurance to just about anyone who’ll listen.
Today, Moore is cancer-free, but continues to be tested every few months. “I am one MRI away from going back on claim,” Moore said. “But this has changed me for the better. I take a very carpe diem attitude.”
Bucci said, “If you have money coming out your ears, if you have $20,000 under the mattress and $20,000 in the bank, don’t worry about disability insurance. But in today’s world, there’s not a lot of us who have $10,000 in case we get hurt.
“We have a bunch of guys at work who think they’ll never be sick, and maybe 25 years ago I was one of those guys,” Bucci said. “But if you want to protect your savings or assets, I would definitely recommend a disability insurance policy.”
Cost and Other Considerations
Generally, the cost of disability insurance is based on your age and your income. It’s usually 1% to 3% of your income.
The average cost for individuals is $1,900 a year for a long-term disability plan. For a group plan, it’s $1,500, said Judith Bramson, assistant vice president of health product marketing at MassMutual.
“Very high-earning executives with a richer benefit would be higher. But our average policy is less than $3,000 premium, with a 90-day elimination period and disability income up to the age of 65,” she said.
The shorter the elimination period, the higher the premium would be, she said. So if you could go 180 days before the policy kicked in, you’d find the premium lower. Also, the younger you are when you buy disability coverage, the less expensive it is. Nonsmokers also may pay less than smokers.
Experts say you should consider the financial strength of the insurance company you are doing business with. “You want to make sure the company and the policy are there for you when you need it,” Bramson said. You can check a insurer’s financial strength rating at www.ambest.com/consumers
Lance Osborne, Aflac’s vice president of field force development, said when shopping for disability insurance, consumers should be aware of the income replacement cap, or what percentage of your income the policy will pay.
Except for the first two weeks of some short-term disability policies, no disability policy will pay you 100% of what you earned. That’s a built-in incentive to get you back to work as soon as possible.
You should also be aware of the benefit period, which is how long the insurer will pay you benefits. If you buy long-term disability insurance, you might want to make sure that you’d be covered until you are 65 or eligible to receive Social Security benefits.
You can find additional information and view interactive worksheets to help you figure out how much disability insurance you’d need, at the following Web sites:
Life and Health Foundation for Education: www.lifehappens.org
The Council for Disability Awareness: www.disabilitycanhappen.org
Terms to Know
Guaranteed Renewable: This means your policy can’t be canceled as long as you pay the premiums. However, the premiums can be raised for an entire class of people (including you, as long as you are not being singled out).
Noncancelable: This means your policy can’t be canceled as long as you pay the premiums, and your premiums will never be raised.
Inflation Protection: This additional rider would add a cost-of-living increase to your benefits if you needed the policy.
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