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What Is Individual Disability Insurance and Why Should You Get It?

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What Is Individual Disability Insurance and Why Should You Get It?

Injuries can happen without warning, even when you’re in great health. In fact, about 5.6 percent of the working population experiences an injury that puts them on short-term disability each year.

If you’re one of them, you’ll need to find a way to make ends meet until you can return to work. While you could rely on savings alone, you don’t have to. Disability insurance can help give you a reliable source of income while you’re unable to work.

Sounds great, right? But there’s more to it than meets the eye. Here’s what you need to know about disability coverage.

What Individual Disability Insurance Is

Simply put, individual disability insurance is a type of insurance policy that helps replace your income if you’re injured and unable to work for an extended period of time.

The policy can help you whether you’re employed part-time or full-time and you’re able to file a claim even if the injury happens when you’re away from work.

As long as the injury keeps you from being able to perform your job duties, you can file a claim and get the help you need replacing a portion of your income.

Disability insurance isn’t offered by every employer as part of your standard benefits practice. That’s why insurance companies offer individual policies so you can purchase coverage on your own easily.

Disability Coverage Is Separate from Health Insurance

Though disability insurance kicks in when you’re injured, it’s not part of your health insurance policy. You’re free to use the money you receive for whatever expenses you have. This can include medical bills, but you can also use it to pay for your rent, food, and other daily necessities.

Similarly, you don’t even need a health insurance policy in order to buy coverage. If you’re working, have established paystubs, and feel worried about making ends meet if you’re injured, you can buy a policy.

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What It Covers

Typically, disability insurance provides a set percentage of your regular income while you’re unable to work. The exact percentage varies from policy to policy.

In most cases, you can expect to receive 60 to 70 percent of your base pay with a short-term disability policy. If you have a long-term disability policy and can’t return to work for an extended period of time, you’ll receive between 40 and 60 percent of your base pay.

As we said before, you’re able to use that money for whatever expenses you need to cover. There are no restrictions in place.

Why Should You Invest in a Policy?

Believe it or not, nearly every worker can benefit from an individual disability insurance policy. But since most people just buy the coverage offered by their employer, they may not be aware of the option in the first place.

This means you’re on your own to cover expenses if you get injured and can’t get back to work.

No matter what type of policy you buy, you can expect these surprising benefits.

Helps Cover Your Medical Bills

When you’re injured on-the-job, you can file a workers compensation claim. But if you’re injured on your own time, you’ll have to rely on your savings to pay for any medical treatments.

Individual disability insurance gives you the money to cover those bills while you’re out of work. This means you’re free to seek the treatments you need without worrying about how you’ll pay for them in the first place.

Allows You to Focus on Your Recovery

When you’re constantly worrying about money, you’ll get stressed. This stress can take a major toll on your ability to heal and recover quickly.

With disability insurance, you’ll be able to focus on a speedy recovery and do what’s best for your body rather than worrying about pinching pennies.

Saves Your Savings

You’ve been saving up for a reason—and that reason probably wasn’t to cover your lost income due to an injury. With a disability insurance policy, you’ll be able to keep most of those savings in place.

Keep in mind that this will depend on how much money you need each month. If your expenses are low, you may be able to avoid using your savings completely.

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Keeps You from Going into Debt

People take out personal loans and use credit cards to cover unexpected expenses all the time. Imagine if you’re out of work for several months and need to find a way to make ends meet until you’re able to get back to work.

Short and long-term disability insurance decreases the risk of going into debt while you’re out of commission. You’ll have at least a portion of your regular paycheck to cover costs. This means you’ll be able to avoid taking out those high-interest personal loans while you’re unable to work.

Should You Buy Short or Long-Term Disability Insurance?

Ultimately, the type of policy you choose will depend on your personal preference.

If your job doesn’t put you at high-risk for injuries and you avoid activities outside of work that could lead to serious injuries, short-term disability will likely be okay.

But if you work in an inherently dangerous environment or engage in activities that could lead to severe injuries that keep you from being able to work for more than a year, invest in long-term coverage.

Keep in mind that filing insurance claims won’t guarantee that your coverage will kick in. You may need to hire an attorney to represent your interests with the insurance company and help you get the money you deserve.

Final Thoughts

Disability insurance is a wonderful way to protect your finances while you recover from an injury that prevents you from working. It gives you a regular paycheck and lets you focus on recovering quickly without having to stress about money.

If your employer offers a policy, feel free to enroll in it. But if your company doesn’t provide disability insurance, you can and should buy a personal policy. Just speak with your insurance agent and start exploring your options.

The sooner you invest in coverage, the better.

Looking for more tips on taking care of your health? Check out our latest posts.

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