simarik / iStock.com Disability insurance protects your paycheck in the event that you are unable to work due to illness or injury. But if you’re a generally healthy person, you may feel like you don’t need it. In this “Financially Savvy Female” column , we’re chatting with Rachael Burns, CFP and founder of True Worth Financial Planning , about why all women — even healthy ones — should consider getting disability insurance .
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Best Savings Accounts: Choose a high-interest savings account from our top banks with rates at 5X to 10X the national average and start saving today. What are some of the reasons women might need disability insurance over the course of their working years?
One in four women have a disability, so the likelihood of becoming disabled from sickness or injury is simply too high to ignore. For most people, a loss of income due to a disability would be financially devastating, and the impact can last a lifetime. Not only would they be unable to cover their current expenses, but they would be unable to save for retirement as well. Single women are at greater risk because they don’t have a spouse’s income to fall back on.
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The chances of becoming disabled are low. One in four of today’s 20-year-olds will be out of work for at least a year at some point during their career, due to a disabling illness or injury.
They still would be able to perform their “desk job” if they got injured. People often forget that many disabilities are caused by illness, not injuries. Even if your job is not physically demanding, you’d still be unable to perform it if you were seriously ill.
Their family member would take care of them. Even if they have someone to take care of them, they still probably would need to cover their own expenses. Also, it’s unlikely a family member would be able to provide around-the-clock care without jeopardizing their own finances.
They’ll get disability benefits through Social Security. Disability benefits through Social Security are surprisingly difficult to qualify for, and they generally pay only between $800 and $1,800 a month.
Their existing group coverage is enough. Some assume because they have a group policy through work that they are adequately covered. However, the base policy might not be enough to cover their needs, depending on their situation.
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They should get a copy of their policy and check for the following details:
> What percentage of their income is covered? Generally, disability insurance won’t cover more than two-thirds of your salary, so you need to determine if this is enough to cover your needs. Don’t forget that in addition to covering your normal expenses, you may incur new costs due to your disability, like hiring in-home care, remodeling your home to make it wheelchair accessible, etc.
How long is the waiting period? The longer the waiting period before you are able to start receiving benefits, the more cash you need to have set aside to cover your expenses in the meantime.
How long does the benefit period last? Some policies provide income no matter how long you are disabled, and some cover only a certain number of years. It’s important to have a plan for when your coverage ends if you have a permanent disability.
What else do women need to know about disability insurance?
A potential disability is one of the biggest threats to your financial future. It’s even more critical that single women have a plan for disability, because they don’t have a spouse’s income to fall back on.
GOBankingRates wants to empower women to take control of their finances. According to the latest stats, women hold $72 billion in private wealth — but fewer women than men consider themselves to be in “good” or “excellent” financial shape. Women are less likely to be investing and are more likely to have debt, and women are still being paid less than men overall. Our “Financially Savvy Female” column will explore the […]
source Here’s Why All Women Should Consider Getting Disability Insurance