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What is Disability Insurance?

Nov 24, 2007
Some people may be surprised to learn that disability insurance is every bit as important as life insurance. Many times it can be even more important than life insurance. This article examines some of the issues concerning disability insurance and how it can help protect your lifestyle in the event of a serious illness or injury.

Disability insurance is used for the protection of your future income. It is the best way to protect yourself in the event that you are unable to earn a living due to poor health or serious injury. As with most types of insurance, disability insurance comes in different forms.

One of the reasons that disability insurance is considered to be just as important as life insurance is the fact that you are still alive when disability insurance takes effect. Life insurance, of course, only takes effect once you are passed on. Life insurance will deliver a sum of money to your beneficiaries that they can use as they see fit. If you are injured or ill to the point that you cannot work and earn a living, where will the money come from to meet your financial obligations?

In a very broad sense, disability insurance can come in three ways. Your employer may have you covered through a group plan at work. The Social Security Administration may be able to provide some relief if you meet their requirements. Lastly, you can purchase private disability insurance from an insurance carrier the same way that your purchase life insurance.

An interesting fact concerning disability comes from the Social Security Administration. Their studies claim that a 20-year old working person has a 3 in 10 chance of being disabled before reaching retirement age. According to their numbers, 30% of the populace is susceptible to needing some form of income protection within their lifetime. That is a staggering number if you think about it.

While disability insurance is important it is also more expensive than life insurance. This only makes sense as it is expected that the insurance company will have to pay out more in disability claims than it will in life insurance claims.

Consumers should understand that disability insurance is not the same as health insurance, which is used to help pay the cost of medical expenses. It is somewhat ironic that medical insurance can save your life and improve your health but you might still find yourself homeless if you are disabled and cannot earn a living. Disability insurance protects you from that unpleasant reality.

Individuals who are single or have no family members often decide to by-pass life insurance because they have no one to benefit from the insurance. In other words, they have no beneficiaries. Those same individuals, however, should not by-pass disability insurance because, in essence, they are the ones who will benefit should they become disabled and unable to work. It only makes sense that even single people who are unable to earn a living will still need some form of financial assistance in order to live.

Anyone who is dependent on their income to pay their bills should seriously consider adding disability insurance to their financial planning portfolio.
About the Author
Peter Kenny is a writer for The Thrifty Scot, please visit us at Cheap Life Insurance and Mortgages
Visit http://www.thriftyscot.com
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