While disability income insurance is one of the most overlooked types of insurance, it is one of the most important. It can help provide a safety net for unexpected pitfalls in life, such as injury or illness that prevent you from performing your duties and obtaining your normal cash flow. Some frequently asked questions (FAQs) about disability income insurance may provide answers to your own questions.
What is my need for Disability Insurance?
Your current income. If you suddenly become injured or ill and cannot return to work for a period of time, will you be able to cover the cost of living and maintain your current lifestyle without that income? While most of us protect and insure the life we’ve built for ourselves and the property we own, we often neglect to protect our income—the most important asset we will ever own. Disability insurance can help cover these costs and protect your cash flow needs if you are unable to work.
When should I get Disability Insurance?
It is never too early to get disability insurance. Many think “this will never happen to me” and neglect to get disability coverage but the truth is that chances of a disability happening to you are greater than you may think—and it’s not necessarily age-related which many assume. According to a 2015 study by the Social Security Administration, one in five people are living with a disability in the United States. Even for the younger generation, 20-year-olds today have more than a one in four chance of becoming disabled before reaching retirement age. The facts are clear: accidents happen and no one is immune to illness or injury, regardless of their age.
How does Disability Insurance work?
Disability income insurance is actually income protection for yourself since it can help replace a percentage of your income if you can no longer work for a period of time. A disability policy will help pay for your cost of living to keep you as comfortable as possible during the time you are unable to work. The monthly disability benefit generally is not taxed if premium was paid with after-tax dollars (state laws are applicable).
A disability is inconvenient enough. Having a sound financial plan is a goal most of us strive for and a disability income insurance policy brings you one step closer to meeting that goal. If the unfortunate occurs and you incur a disability, you won’t have the added stress of figuring out how to replace your income so you can live as normally as possible for that period of time.
To learn more about the AIA Trust disability insurance plans, click here.