Should disability income insurance be a priority?

We have many competing financial priorities. Health insurance ranks near the top of the list for many people, and the importance of owning this coverage is understandable. Next on the list for many people is the need to invest for retirement, especially as fewer companies offer traditional pensions. So it’s not surprising that owning disability income insurance isn’t at the forefront of many individuals’ thoughts. A recent survey confirms this.

According to the nonprofit Life and Health Insurance Foundation for Education (LIFE), 27 percent of working Americans surveyed said they would have trouble supporting themselves immediately following a disability that keeps them from work. Another 49 percent said they would have financial difficulties after a month away from work, while almost three quarters said they would have trouble financially after six months.

Yet, it’s easy to understand why many people don’t have the coverage — they may think disability won’t happen to them. Unfortunately, it can. According to statistics compiled by LIFE, one in three Americans will experience a disability lasting at least three months and one in five will have a disability lasting a year or more.

Social Security disability payments may not be sufficient to meet your income needs, while workers’ compensation only kicks in if you prove you were hurt on the job. Disability income insurance provides financial protection that helps replace a portion of your income — most people’s biggest asset — when you can’t work due to a qualifying disability.

If you don’t have this protection, one of the first places you might look for it is through your workplace. Many companies make available basic group disability income insurance for their employees at group rates.

You might also investigate an individual policy. Talk to your licensed financial professional to learn how you can customize an individual disability income insurance policy that helps meet your needs and ability to pay for it. Often someone will have an individual disability income insurance policy to compliment group coverage.

For example, you can typically choose a benefit level of between 40 percent and 65 percent of your pre-disability earnings. You also have a choice of benefit periods. The waiting period until benefits begin, inflation protection and the definition of what constitutes a disability are all components that help you customize a policy to fit your needs and budget.

Jeff S. Waters is a financial advisor at Waters Wealth Strategies. He can be reached at 358-7126 or be e-mail at