Financial Literacy: Safeguarding Your Income with Disability Insurance (Ep. 14)
What would happen if you suddenly couldn’t work due to an accident or illness?
In this insightful episode of ‘Between Life and Money: Finding Balance,’ host Jeff Panik discusses the importance of disability insurance. He breaks down the necessity of both short-term and long-term disability coverage, highlighting how these insurance types can shield you from financial distress if you’re unable to work. From understanding different policies to managing coverage during job loss, this episode equips you with the knowledge to plan for your financial future.
Key Highlights:
- Statistics on Disability: 43% of men and 54% of women are likely to become disabled during their working years. Having a safety net is crucial.
- Financial Implications: It’s essential to have a plan to cover living expenses if disabled. Many people lack adequate savings or debt alternatives.
- Types of Disability Insurance:
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- Short-Term Disability: Covers serious illness/injury for up to six months. Coordination with long-term disability is essential to avoid gaps.
- Long-Term Disability: Provides income replacement (40-70%) for extended periods, typically until age 65.
- Coverage Considerations: Self-employed individuals must seek and compare their own disability insurance options. Review employer-provided plans during open enrollment. Some policies can continue after job loss but may cost more with age.
- Elimination Period: Waiting period before benefits start, usually 30-180 days. Longer periods lower costs but require an emergency fund.
- Income Coverage: Balance premium costs with the level of income replacement needed to maintain your lifestyle.
Practical Advice:
- Regularly review and adjust disability coverage.
- Use resources like PolicyGenius.com to compare insurance options.
- Work with an advisor to understand complex insurance documents.
Resources:
Connect with Jeff Panik:
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