Only 14% of Americans have a disability insurance policy. For most people, if they have to stop working because of a disability or injury, they don’t have a backup plan to cover lost income.
That’s what disability insurance does. You have peace of mind while you take care of your health. Not having a disability insurance policy could leave you in financial ruin.
How much does disability insurance cost? Read on to find out in this article.
How Much Does Disability Insurance Cost?
There are several factors at play that determine the overall cost of disability insurance. The type of insurance is the leading factor.
The two most common types are short term and long term disability insurance. Short term disability insurance covers injuries or a disability that keeps you from working for a short period of time. This type of coverage lasts for a few months to a year.
Long term disability insurance covers permanent disabilities and other types of disabilities that keep you working for a longer period of time. These are issues that could last for years or until retirement age.
Long term disability coverage is more expensive than short term because you’re covered for a longer period of time.
Your current health is another cost factor. If you’re obese or a smoker, you should expect to pay more for disability insurance.
There are group and individual disability insurance policies. A group insurance policy is combined with other policy holders, which brings the cost of insurance down.
You’re likely to get a group insurance plan through your employer. If you’re self-employed, an industry association might offer a group disability insurance plan.
If you can’t get on a group plan, you can get on an individual plan.
If you’re trying to budget for a disability insurance plan, you should expect to pay anywhere between 1% and 3% of your annual income in premiums.
Applying for Disability Insurance
Most people don’t think about disability insurance until it’s too late. It’s best to apply for disability insurance when you’re young and healthy.
It’s the time when you’re least likely to need it, but you’ll get insurance at the lowest rates. Be prepared to pass a medical screening as part of the application process.
Isn’t Worker’s Compensation the Same as Disability Insurance?
Many workers get confused by the different types of disability insurance. They assume that they don’t need disability insurance because their employers have worker’s comp insurance.
The main difference is coverage based on where and when the injury or disability occurred. Worker’s compensation insurance only covers your injuries if you were hurt while performing your job duties.
If you get hurt in a car accident outside of work and can’t work, then you’re not covered by worker’s compensation. Disability insurance will cover you.
Get Disability Insurance for Peace of Mind
If you want to have complete financial security, you should invest in a disability insurance policy. It gives you financial cover if you have to miss work due to a disability.
How much does disability insurance cost? Expect to pay up to 3% of your annual income. It’s well worth it for peace of mind.
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