As stated in its name, your life insurance policy provides coverage for your life. To be exact, your life insurance policy ensures that your loved ones will be provided for in the case of your untimely death so long as it meets the criteria listed in the contract. As a result, your life insurance policy does not include disability insurance, which is problematic because the loss of income is much more likely to come from disability rather than death.
What is Disability Insurance?
Disability insurance exists to ensure that you have money if you are ever rendered incapable of working by a disability. As a result, you can focus on your recovery instead of having to worry about how you are going to pay for your living expenses.
Please note that disability is something of a catch-all term, meaning that there are numerous forms of disability insurance out there offering a wide range of coverage. For example, if you are covered by long-term disability insurance, you get a percentage of your former income paid to you on a periodic basis. In contrast, if you are covered by critical illness insurance, you get your covered amount paid to you as a single lump sum. Similarly, different disability insurance policies cover different circumstances, come with different options, and provide different amounts of coverage, meaning that you need to carefully read through the contract if you are determined to get the best results.
Should You Get Disability Insurance?
You should get disability insurance for the simple reason that your chances of becoming disabled for a short period of time are surprisingly high. According to MoneySense, you have a 1 in 6 chance of becoming disabled for 3 months or more before you manage to reach the age of 50. As a result, disability insurance makes financial sense even if you are young and healthy.
With that said, just because you should get disability insurance does not mean that you should get all of the coverage that you can. After all, additional coverage is expensive, meaning that you need to strike a careful balance between the size of your premium and the amount of coverage that you are likely to need.
You know your budget best, but you need to consult an insurance expert about your optimal coverage amount based on your lifestyle and your risk factors.