Disability insurance benefits can be incredibly useful if ever you are unable to work due to an injury or illness. No one can truly know what the future holds but safeguarding your income by purchasing disability insurance can provide peace of mind that your earnings and livelihood are protected.
However, it is no secret that not everyone has disability insurance. When you are young and healthy, disability insurance can be seen as an additional cost at an already expensive time in life. Nonetheless, there are strategies out there that can make disability insurance more affordable. Let’s discover 3 easy ways to lower your disability insurance costs.
Lengthen Your Elimination Period
Before you are entitled to claim disability benefits, there is a time period for which you must be disabled. This period of time is called an elimination period. In summary, if a person becomes disabled, they must wait until the elimination period is complete before they can receive benefits. If the individual is able to work before the elimination period is over, the person will not receive any benefits. As a general rule, opting for a longer elimination period can lower your disability insurance premium.
With this in mind, if you have modest expenses, other financial reserves like savings or investments, or if someone else in your family is able to financially support you, then lengthening the time period for which you would be without income can work in your favour. Typically, elimination periods last for around 90 or 180 days, but these periods can be extended. If you do decide to lengthen your elimination period, just be sure to keep a tab on your other financial reserves in case your circumstances change.
Customize Your Coverage
There are other tweaks you can make to your disability insurance policy to create a more affordable deal. When you initially go through the underwriting process to buy disability insurance, your quote is most likely to cover your maximum eligible insurance. Although this amount does not usually cover the entirety of your pre-disability income, and is normally capped at around 60-70 percent, if your monthly expenses are in fact much lower than your benefit quote, you might want to settle for a lower benefit.
Furthermore, it is important to note that you should apply for disability insurance while you are young and healthy. The majority of insurance policies require medical underwriting and this can include reviews of your medical records, blood tests, and in some cases, a physical assessment. You are usually more likely to be underwritten successfully at the start of your career. You can also eliminate any riders such as catastrophic disability coverage, cost of living adjustments, own occupation coverage, and residual disability coverage if you have alternative arrangements in place. As before, if you accept a smaller benefit agreement to lower the cost of disability insurance, you still need to have savings, investments, or other financial resources to cover any gaps in your income.
Purchase Group Disability Insurance
If you work for a large company, there is a chance that your employer will provide long-term group disability insurance. Long term group disability insurance provides workers with a portion of their salary if they are unable to work for a long period. This period usually lasts for over six months. To find out more,take a look at your employee benefits guide and if necessary, ask your employer about their disability insurance coverage. Often, an employer pays these premiums for you at a reduced rate.
Group disability insurance benefits do have limitations though, and their definition of disability can vary. Consequently, your employer might allow you to purchase further coverage or even additional short term disability insurance for a small pay check deduction. Short term disability insurance policies offer workers a portion of their salary if they are unable to work for a short period. This period usually lasts for three to six months. Above all, whereas individual disability insurance can be more expensive than a group policy, having some insurance is always better than having none.
Ultimately when buying disability insurance, while it can be tempting to get hung up on the cost, it is crucial that you weigh up the potential benefits of your policy against the consequences of having inadequate coverage. Your ability to earn an income is one of your greatest assets, and therefore taking steps to safeguard your future by purchasing disability insurance is strongly recommended. In particular, remember to shop around so that you can find the best coverage for your budget and needs.If you would like to learn more about balancing your finances when unable to work due to illness or injury, check out this useful guide filled with financial advice for the newly disabled.