Finding The Right Coverage With Disability And Life Insurance

Life insurance and disability insurance are very different tools. While they both work to protect your finances, studies show you need both, and probably more than you realize. For working families trying to save money in any way possible or millennials who feel they’re decades removed from needing benefits like health insurance, the idea of having both types of coverage can seem like a luxury.

The Life Insurance Management Research Association (LIMRA) reports 70 percent of consumers say essential living expenses keep them from purchasing insurance coverage or increasing current coverage. However, if you or your partner were to suffer a debilitating injury, you would lose far more in forfeited wages than you would in the monthly cost to cover a disability insurance plan.

Why Do I Need Disability Insurance?

The Social Security Administration estimates workers in their 20s have a 1-in-4 likelihood of becoming disabled to some degree before retirement. Most people think disabilities are formed by serious accidents, but that isn’t the case. LIMRA says the top causes of disability are chronic conditions, like muscle pain and back problems.

In the event your injury or chronic pain keeps you from working, life insurance coverage will not protect your income. You need disability insurance to ensure you’ll still get paid even if an injury keeps you from work. Disability insurance pays part of your salary – usually 60 percent – during times you’re too hurt or ill to work. Most providers offer a short-term option, in which benefits expire within about two years, and long-term policies.

Why Do I Need Life Insurance?

Life insurance isn’t just for those of a certain age. Even when people recognize the value of life insurance, they often fail to take the steps to make sure their family or partner is protected. The truth is, life insurance is an easy step and is often inexpensive.

Life insurance is the peace of mind that your family is taken care of financially if you die. Your beneficiaries will receive your life insurance pay out to cover expenses like housing, debt and monthly bills. Without your income, your family will depend on the benefits of a life insurance policy to survive financially.

As you consider the cost of life insurance and how much coverage you’ll need, calculate your outstanding debt and five years of annual salary. If you’re a primary care giver or are in between jobs, use the average U.S. salary of $40,000 to signify your income. A healthy person in their mid-thirties, for example, can gain coverage for about $30 a month for a $500,000 policy. Costs can increase as you age, so it’s best to get life insurance in your younger years.

Save money on life insurance costs by maxing out your policy coverage at work, which is generally a low-cost option for coverage.

Life insurance cannot replace or fill in for disability insurance if you get hurt or sick. It’s important to have both coverage options for an unexpected period when you can’t work and to ensure your family is financially secure beyond your years.