It’s probably the last thing on your mind, and definitely the last thing you want to think about, but disability insurance is important coverage to have — in my book, it’s more important than life insurance. A friend of mine once remarked “the worst thing about not having disability insurance is that you have to live through the consequences.” True, right? The consequences include not just losing your income stream, but typically incurring more expenses than you had when you were working. That, to me, is what makes disability insurance more important than life insurance.

I recently volunteered at the front door of a fundraiser for a young family at my church. The father, a 45-year-old carpenter, was hit with a debilitating disease akin to multiple sclerosis and could no longer brush his teeth on his own, nevermind go back to work. He can’t be left at home alone because he has lost a lot of cognitive abilities, and can’t tell the difference between a drill and a pencil. Not only has the family lost his income, but they will likely have to pay for a caregiver to spend time with him while his wife is at work.

During a quiet moment, I counted approximately $5,000 of donations collected at the door. The amazing show of generosity warmed my heart. But, knowing my family’s expenses, I was disappointed to realize that $5,000 might not last over two months — depending on their financial circumstances.

How long would $5,000 last in your family, if you weren’t able to work or care for your children?

Disability Policies Vary.

It’s Important to know the differences between them.

DURATION:

Some employers provide short-term and long-term disability coverage to employees. The coverage can range from coverage during maternity leave to coverage only if you become permanently disabled.  Short-term disability is typically up to 180 days of coverage, depending on the disability (postpartum recovery is typically 6 to 10 weeks). Even if you have become permanently disabled, a short-term policy will stop coverage at the end of the period. If you have long-term disability coverage, it will hopefully kick in after the short-term policy ends. Take a look at the time limits on your employer’s plan. If you’re not happy with it, shop around for your own policy to augment your employer’s. One benefit of having your own policy is that you can take it with you from one employer to the next, and you’re not at the mercy of your next employer’s choices about disability coverage.

DEFINITION OF “DISABILITY”:

If you’re in the market for a policy, you should look for a policy that covers your “own occupation,” which means that it will kick in if you are unable to work at your current occupation. Otherwise, an “any occupation” policy will not pay out if you can still work a minimum wage job. There are degrees of coverage in-between, including “modified any occupation,” “split definition,” and “loss of income.” It’s important to pay attention to the definitions the insurance company uses to determine whether or not the insured is entitled to benefits.

ELIMINATION PERIOD: 

Disability coverage is not cheap, and you may balk at the cost. If you would like to save a little money on your premiums, you can opt for a 30 to 90-day “elimination period.” That means that the coverage won’t kick in until 30 to 90 days after the disability began. We opted for  90-day elimination period, on the theory that our emergency fund can help us make ends meet for 90 days in the event of a permanent disability. This saves us a lot of money each year on premiums.

HEALTH SCREENING: 

You will be required to undergo a physical before being approved for disability insurance, and the potential insurer will also review your medical records. It’s common for the insurer to make exceptions to the policy for “pre-existing conditions.” That is, if you suffered from back pain in the recent past, the insurer may stipulate that it will cover any disability except for the pre-existing back pain. This is why it is important to get disability insurance while you’re younger, particularly if you’re healthy: Pre-existing conditions could raise the cost of premiums and/or be excluded from coverage. 

SHOULD YOU GET YOUR OWN DISABILITY POLICY?

Only you can make the right decision for yourself. Even though our employers at the time provided one years’ worth of disability coverage, we decided to get our own disability policies, for several reasons:

• Individual policies would last longer than our employers’ plans.
• We didn’t know whether our next employer would offer disability coverage, and if they didn’t we would have to qualify based on our health some time in the future.
• We wanted to qualify while we had fewer pre-existing conditions.
• We could choose an “own occupation” policy and designate the amount of coverage it would provide.
• As a bonus, when you pay for your own coverage, the benefits are tax-free. (When your employer pays, the benefits are taxed)

Thankfully, we haven’t had to use our disability policies. We hope we never will. But they do provide us with peace of mind that we would have the funds to care for each other if the need arose. As I sat at the door to the fundraiser and I mentally calculated how long $5,000 would last us, I thanked my lucky stars that we have coverage.

I left my shift at the front door feeling like I needed to do more to help the family. Readers know that we don’t have much money to spare these days, which is why I donated my time to the fundraiser. I can spare some of that. I chipped in to the 50/50 raffle and told myself that winning the raffle was the only way I could give them more money. And whaddya know … I won! (honestly, I never win raffles!) So, I was able to chip in $350 more.

The other thing I could do — not for this family, but for the next family who may need it — is urge my fellow Staplers to get a disability policy.

Please don’t wait until it’s too late.