Insurance Series: Disability

But the fact is you have a far greater chance of being disabled than dying.

Being disabled isn't necessarily permanent. It might just be a couple of weeks -- or months. It might be mental. It might be physical. But it just might happen.

Insurance Series

You Need Backup

Every working person needs to spend some time considering this issue, suddenly single or not. When you're flying solo, your financial well-being and that of those around you depends on you, period. And if you can't work, for whatever reason, for whatever time span, because of an illness or an accident, you need a backup.

I have interviewed women who went back to work days after their husband's death. Several months later, they fell into deep depression and were out of work for seven weeks or more. I've talked to women who sailed through their divorce but melted down weeks later and needed some time to recoup emotionally. Losing a spouse is debilitating under any circumstance.

To me, disability insurance is more important than life insurance. It can't be ignored.

You might already have some coverage from your employer, but it probably isn't going to be enough. Most employer plans cover just 60 percent of your gross annual income. And only about one-third of big U.S. employers provide any at all.

Some states, including New York and California, require employers to offer short-term disability insurance that might last up to six months.

What to Look For in a Policy

Look for policies sold by life insurance companies. For a policy that will replace 60 percent of your income, expect to pay about 2 percent of your salary. The best way to cut the premium is to go for the longest waiting period you can. Opting for a longer waiting period before you start receiving benefits can save you hundreds of dollars each year.

You might want to opt for a residual benefits rider in your policy. This lets you go back to work half time while you are on the mend and still collect partial benefits. It may cost you an extra 25 percent, but it's worth it.

You might also want to shop for a policy that has a guaranteed increase. That means you can add on to your coverage down the road without having to undergo another medical exam.

And check with your professional associations to see if you can get cheaper group rates.

To get the best-priced policy, you might contact a quote-service company, which will send you the five best-priced policies to suit you. Most don't charge for the service and let you buy the policy from them. Here are a few to get you started:

  • Insurance Quote Services Inc.: 800-972-1104
  • SelectQuote: 800-343-1985
  • TermQuote: 800-444-8376
  • Quotesmith Corp. : 800-556-9393
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