Disability Insurance
Most people buy life insurance to insure against the death of a family breadwinner and fail to insure against a more likely occurrence: disability. Determine the disability benefits you have available from your employer, union, Social Security, and other sources. Then, ask the following questions:
1. How long is the waiting period before benefits become available?
2. Do I have sufficient personal resources to meet my financial obligations during that waiting period?
3. What is the amount of my total monthly benefit?
Only disability insurance will protect against partial disability. So if you have a heart attack and must cut back your work schedule to part-time, you'll need disability insurance that covers partial disability.
As with all insurance policies, you should review your disability coverage every year. Make sure you understand the insurance company's definition of disability. Then, insure 60 to 70 percent of your current income. Lower amounts of coverage could make it difficult to meet ongoing expenses. Finally, consider the waiting period before benefits kick in and determine if you can continue to meet your financial obligations during that time.