How Much Retirement Income Do You Need?
How much retirement income do you really need for your future plans?
If you’re applying for private disability insurance, consider the following questions first.
Questions to ask before applying for disability insurance…
Hello and welcome back to Royal Oak Financial Group’s blog! Last week, we chatted about estate planning and some of the options that surround it. Today, we’re going to briefly chat about disability insurance, what it is, and who should consider applying for it. Whether or not to apply for disability insurance can be a difficult decision to make. Not only is it a confusing type of insurance, but it may also be more necessary for some types of workers. Additionally, disability insurance is often confused with Social Security Disability Insurance. If you’re considering applying for private disability insurance, you might want to take a few things into account:
Quite obviously, Social Security Disability Insurance (SSDI) is offered through government payouts while private disability insurance is sometimes offered through an employer. In order to be eligible for SSDI, you need to show that you’re too disabled to work. Additionally, this option is not a short term solution. For example, if you’re on the job and are injured to the point that you physically cannot work in the next several years, then you might be eligible for SSDI. In most cases, beneficiaries of SSDI have been unable to return to work for over five months, truly cannot work for their current employer, and cannot adjust to new work.
Luckily, SSDI isn’t the only option that exists for those who have been disabled. Many people who are privately insured by their employer don’t have to go through as long of a process as they would through SSDI. Additionally, private disability insurance can be used for shorter-term disabilities and can cover much more of a person’s income compared to SSDI.
While there are many benefits to obtaining disability insurance, such as better coverage and a less stringent process, it’s not always necessary. Dependent on your age and income, the premiums for these plans can be upwards of $70 a month, which can be costly if disability insurance isn’t exactly necessary. However, it’s best not to rely on SSDI to cover you if you do happen on the unfortunate event of becoming disabled, as it’s very hard to obtain and doesn’t pay a lot of money. You should contact a financial adviser before signing up for additional insurance plans.
Unless your income is above a certain amount, you’ll probably want to purchase this insurance through your employer in a group option. When deciding which option to go with, it’s best to choose one that is actually going to help you survive. We recommend that you choose one that covers over 60% of your income and will continue until your actual social security benefits kick in after the age of 65. If you’re a high risk employee, like an athlete, then you may want to look into options that are going to be easier to work with and that will ensure proper coverage.
You’re probably wondering what exactly counts as a disability. Some of the disabilities that are accepted by SSDI, and most private insurance companies, include mental disorders, such as schizophrenia and depression, back injuries, cancer, AIDS/HIV, neurological problems, and vision and hearing loss amongst many others. The type of impairment doesn’t always matter as much as the severity of the impairment.
Disability insurance is difficult to understand! For questions about whether or not obtaining disability insurance is the right option for you, contact Royal Oak Financial Group today and one of our skilled financial advisers will be sure to point you in the right direction!