Should You Get Disability Insurance? 4 Ways to Decide

The question today is: Should you get disability insurance? Well, I went to a conference last year where the common theme is often to motivate and inspire everyone to push harder and go after their goals.

I found it very interesting and ironic when the keynote closing speaker got up to address everyone on the last day of the event. Initially, I was expecting someone to come in and pump up everyone in the crowd to run out really push it over the next few months to meet their goals.

When in fact, she did the opposite by opening with a story about how was a workaholic. Everything changed when she went to the gym one morning for a normal workout and ended up having a brain aneurysm that put her out of work for an entire year.

The speaker went on to tell us how grateful she was for disability insurance during that time. This made me rethink a lot about my situation and whether disability insurance was something I should be looking into.

What is Disability Insurance?

Disability insurance, often called  DI, is a form of insurance that can protect the beneficiary’s earned income in the event that a disability prevents them from being able to work.

In short, no one knows whether they may become temporarily or permanently disabled in the future. When something like that happens, you and your loved ones likely won’t want to worry about income or how you’ll make ends meet.

Disability insurance can help provide you with a generous percentage of your salary which can help provide more peace-of-mind from a financial standpoint. DI rates tend to range from 1% to 3% of your total salary depending on your age and how much coverage you may need. Coverage can replace about 60% to 80% of your pre-tax wages.

Are you wondering should I get disability insurance? Here are 4 ways to help you decide.

1. What Are the Odds That I May Become Disabled?

No one likes to think about losing their mobility but it’s always a possibility. In fact, at least 25% of all workers become disabled for 3 months or longer at some time in their career. This doesn’t mean that you’ll be disabled for life. However, even a temporary disability can devastate someone’s finances.

If you have a parent who became disabled or medical family history that shows some risks, this could be another reason to consider getting disability insurance.

2. Are You the Sole Income Provider?

While I’m not the sole income provider in my household, I have been the higher earner. I remember thinking should I get disability insurance? while the speaker was talking at the conference because I work…A LOT. I wondered what would happen to our finances if I wasn’t able to work as much.

As someone who writes for a living, I rely on my hands and my brain to help me do creative work that I can be compensated for. Another shocking fact I heard was that 62% of all U.S. bankruptcies and more than 50% of all mortgage foreclosures stem from an illness or injury-related medical issues. In the event that I’m not able to do my work – even if it’s just temporary – I want to be covered and protected.

3. Do You Work in a Risky Profession?

How high are the risks of injury or illness at your job? Doctors, nurses, contractors, and similar professions may want to consider disability insurance. While your employer may provide some help if you get injured on the job, it’s important not to count on this solely.

A few years ago a family friend of ours got hurt on the job and the employer would not help cover medical bills or provide much assistance through worker’s comp. It turned into a long and hectic legal battle so this person could attempt to fight for their rights that they believed were guaranteed through their job.

Meanwhile, this person had to go without their basic expenses being covered. While employer-sponsored long-term disability insurance is a great concept, it can often be tricky to have and you’ll want to make sure you’re fully covered if you are paying for it already.

4. Can You Afford To Budget For Monthly Insurance Payments?

Most of us have a ton of bills to take care of on a regular basis. Odds are you are already paying for health, auto, renters or home insurance along with life insurance. Adding another type of insurance to the mix may seem like a financial burden even if it’s necessary.

One thing you may want to do first is look at your budget and see what you can afford. Get some disability insurance quotes or perhaps even start with a smaller coverage amount.

Another option would be to free up some money in your existing budget by either cutting expenses or paying off some debt. You can also set a goal to tackle one of your debts this year then budget for disability insurance payments in the future.

Summary – Should I Get Disability Insurance?

Disability insurance is something that more people should be talking about. It’s important to plan for a successful future but to also be prepared when life and unexpected things happen.

Determining whether you need DI or not is a personal decision that can depend on your age, profession, income, and family needs.

Start by getting a few quotes with providers and understanding what coverage would include.

Have you ever thought about getting disability insurance? Why or why not?