You like to plan ahead to be ready for any eventuality. You have plenty of auto insurance just in case your car is damaged. Your home is protected with a well-thought out homeowners insurance purchase. Your business has an excellent BOP policy. But what about your potential earning capability. If something happened that precluded you from working, temporarily or permanently, would you be OK? Maybe you should think about disability insurance.
There are two types of disability policies: Short-Term Disability (STD) and Long-Term Disability (LTD). STD policies have a waiting period of 0 to 14 days with a maximum benefit period of no longer than two years. LTD policies have a waiting period of several weeks to several months with a maximum benefit period ranging from a few years to the rest of your life.
When considering disability insurance, consider this: Not too long ago, the Social Security Administration estimated that one in four 20-year-olds will become disabled and unable to work before they reach the age of 67. If you think you are safe with Workers Compensation, a Forbes Magazine article pointed out that Workers Comp replaces lost income if an injury or illness occurs on the job, but fewer than 5% of disabling accidents and illnesses are work-related. Most (90%) of long-term disability claims are for illnesses, not accidents.
Also, some policies pay benefits if you are unable to perform the customary duties of your own occupation. Others pay only if you are unable to perform any job suitable for your education and experience. Some policies define disability in terms of your own occupation for an initial period of two or three years and then continue to pay benefits only if you are unable to perform any occupation. “Own occupation” policies are more desirable, but more expensive.
Speak with your insurance professional and go over different options should you become incapacitated, ill, or otherwise unable to continue working. Make sure your livelihood is protected.