Why paying $ 36 a month for disability insurance is worth it for me

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If you were injured in a car crash, an accident around the house, or taken out of service by a surprise illness and couldn’t go to work for a while, would your finances help you? You might have three, six or more months of emergency savings. But ultimately most households would be strapped for cash.

As a self-employed freelancer, I set a goal of about a year of saving in my emergency fund, but with a housewife, three kids, two dogs and a mortgage, I know I have to do it. more than saving to protect my family.

After reading how another Business Insider writer purchased disability insurance, I was inspired and bought the same policy.

What is disability insurance?

Disability insurance is a type of insurance that pays you a monthly benefit if you become disabled and are unable to work. You can find short term disability insurance, which usually kicks in right away and lasts a few months, or long term disability insurance, which requires a longer waiting period but can last much longer.

According to Social security administration, 20-year-old adults have a one in four chance of becoming disabled before reaching retirement age. With those odds, I know I don’t want to risk going without disability insurance.

If you have a full-time job with great benefits, you can access both short-term and long-term disability insurance through your job. If you do, it’s usually well worth the payroll deduction. Otherwise, you can find your own plan outside of work directly from an insurer or insurance agent.

I followed the example of my Business Insider editor colleague

Last summer my friend and fellow Business Insider writer Jackie Lam wrote about how she suffered an eye injury that kept her from working for a month. After this awakening, she took out disability insurance for Freelance Union, a non-profit organization that offers a range of services and benefits to the self-employed, including disability insurance.

Jackie’s policy costs $ 23 per month and includes a benefit valued at $ 2,500 per month. My mortgage and health insurance alone is over $ 2,500 per month, so I absolutely wanted a higher level of coverage.

Freelancers Union disability insurance comes with a 30- or 90-day waiting period, which is the time you have to wait before coverage begins. I took the maximum coverage available for my annual income and age. I pay $ 36.12 per month for $ 5,000 per month coverage.

Although I automatically pay Freelancers Union each month with my business credit card, the policy is actually underwritten by The Guardian Life Insurance Company of America. No matter where you purchase insurance, it’s important to understand how the policy works and who pays your claims if you become disabled.

What to look for in a disability insurance policy

When setting up my disability insurance, there were a few important areas I wanted to review before signing on the dotted line:

  • Monthly cost of the desired coverage: Cost is a primary consideration for any insurance product. Before moving to Freelancers Union, I looked for other disability insurance policies with higher monthly premiums. Rates may vary depending on the monthly benefit you choose, as well as factors such as your age and health history.
  • Waiting time: I chose a 90 day waiting period for my disability insurance because I still have an emergency fund with over three months of living expenses. Depending on your financial situation, you may be willing to pay a little more for a shorter elimination period or save by having a longer elimination period.
  • Insurer quotes: Guardian is the insurer behind my policy. It is rated A ++ by AM Best, a measure of the insurer’s ability to pay claims in the future. It also gets a positive rating from JD Power, a company that measures customer satisfaction from insurers and other industries.

Ultimately, your disability insurance should cover your essential monthly bills if you fail to earn a salary. Social Security disability insurance can also provide you with coverage, but it probably won’t be enough to cover your bills on its own.

About Antoine L. Cassell

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