Financial experts like debt guru Dave Ramsey and insurance advisor Courtney Rogers agree that only a few kinds of insurance are truly necessary. These include
- Term life (while you’re working)
- Homeowner’s (for any time you own a home)
- Auto (required by law)
- Disability (while you’re working)
Of these four, statistics show that disability insurance is the one missing from most homes. It might be that this insurance gets less attention in the media. It might be that people don’t understand the risk. Whatever the reason, those who are “working without a net” in regards to this important protection should consider these little-known benefits of disability insurance.
- 1. Faster Recovery
This is a simple equation. Stress reduces the body’s ability to heal from illness and injury. Being out of work from a disability causes financial stress. If you’re hurt or ill with no income, your body can’t get you back to work as quickly as it would if you were getting paid. Being disabled without income also makes it harder to pay medical expenses, which can further increase how long it takes to get well.
- 2. Return on Investment
Disability insurance premiums cost 10 percent or less the price of term life insurance. Further, you’re more likely to need it at some point in your life than to make a claim on your life insurance – and you’re infinitely more likely to need it more than once. Statistics show only auto insurance is more likely to result in a payout to you, and disability runs at about one-fifth the price of average auto coverage.
- 3. Reduced Family Illness
While you’re down, it’s important for your family to operate at peak ability to take up the slack. Unfortunately, lack of sleep and worry about you make them more likely to become ill than at any other time in your life. Though the payments from disability insurance won’t end all of their stress, not having to worry about money will help their immune systems – and help pay for preventive care that will keep most illnesses minor.
- 4. Enhanced Estate
If you want to leave a little something behind for your heirs, a long disability is one of the best ways to ruin that plan. The lost wages can force you to live off of savings, then borrow off of home equity, and dip into retirement funds until nothing is left to leave. Although disability insurance won’t pay for the costs associated with hospice or in-home care, it will keep wages coming in while you’re ill.
Any horror stories about losing wages from illness or injury? Join the conversation and tell us about them below.