MoneyTalk

There are a few things in life that we just don’t like to think about, one is dying, and the other is becoming disabled. However, just because we don’t like to think about those possibilities, doesn’t mean we don’t need to prepare for them. While Americans may understand the need to purchase health, auto, home, and even pet insurance, many neglect to insure one of their greatest assets, their income. With approximately 110 million Americans without long-term disability insurance, the case for this insurance may need to be made now more than ever.

Here are 6 good reasons to purchase long-term disability insurance.

1. Disabilities are More Common Than you may Think

Americans are far more prepared for death than they are for a disability, yet a person in the U.S. has a greater risk of disability than death at every age between 20 and 65.  According to the Council for Disability Awareness, just over 1 in 4 of today’s 20 year-olds will become disabled before they retire. We live in a time that disability insurance is a safe bet in a world where life is anything but predictable.

2. You Need to Protect Your Income and Those who Depend on It

While you may think of your home and other material items as your largest investments, your ability to work and provide income throughout your lifetime is by far your largest asset. Your income stream needs to be protected.  Your need for disability insurance is even greater if you have anyone that depends on your income for their financial welfare. Your responsibility to provide for those you love cannot be taken lightly. If you need life insurance, you also need disability insurance.

3. Social Security Could Leave you Waiting and Wanting

If you think that you need only rely on Social Security disability payments in the case of a long-term disability, you may need to think again. While you may be eligible for benefits if you become disabled after working 10 years, you will most likely be subject to long waiting periods. Even if your benefits are approved, they may not be even close to covering your lost income. In 2015, the average monthly disability benefit received from SSDI was $1,165, barely enough to keep the beneficiary above poverty level.

4. Your Emergency Fund may not be Enough

If you have been a conscientious saver and have a 3-6 month emergency fund, you are further along than the average person. However, while this savings can give you a substantial lift during a short-term emergency, it is unlikely to be enough to cover your needs in the case of a long-term disability. In fact, the average long-term disability absence from work lasts 34.6 months, and it’s pretty rare to find anyone with a 3 year emergency savings stashed away. Disability Insurance can replace about 60 percent of your salary during a time that could be financially devastating.

5. To Protect Your Assets

You don’t want an unexpected accident or illness to take away those things that you have worked so hard to obtain. According to the  Council for Disability Awareness, medical problems contributed to half of all home foreclosures as well as 62% of all bankruptcies. Long-term disability insurance, as well as a sound financial plan, can help protect your hard earned assets when life hits you fast and hard.

6. To Give you Peace of Mind

As with all financial planning, obtaining long-term insurance is essential to ensure peace of mind in the event an accident or illness takes away your ability to work. While no one wants to feel vulnerable by the thought of a possible accident or long-term illness, preparing for those events can give you financial stability and allow you to focus on healing.

Your employee may offer long-term disability insurance through work as an employee benefit at your current job, but if it is not offered, consider your options of buying insurance through a private company. Long term disability insurance average cost may be more affordable than you think when you determine both the benefit period and the benefit amount. Just make sure you understand your policy before signing on the dotted line.

What experience have you had with long-term disability insurance?