The Justification For Having Disability Insurance
Disability Insurance is designed to protect our income from a disability we may suffer that causes us to not be able to go to work.
Disability Insurance is possibly the most important type of insurance you can buy, but most Americans don’t buy it.
Believe it or not, you are more likely to become disabled and unable to work for a period of more than 90-days before age 65 than you are to die. In fact, expect around 30% of us between 35-65 to experience a disability causing us to miss work for at least 90 days. Of the 30% of us who will experience a disability lasting over 90 days, fully half of us can expect we will be out of work longer than 5 years!
Can you live without your work income for 3 months (90 days)?
Can you live without your work income for longer than 5 years?
(Most Americans cannot go 3 months without their work income, by the way.)
Assuming you take home $5000/mo ($60,000 take home), save $500/mo (10%), and spend the rest ($4500/mo).
10-years of saving and stashing it in a bank will create $60,000 ($6000/yr times 10 years)…
Your savings will cover your living expenses for only 13 months ($60,000 divided by $4500/mo)!
What will you do then?
A little tidbit of information for you – about half of all home foreclosures are due to a disability, not due to the death of a family member. In fact, the amount of foreclosures due to the death of a family member is almost negligible.
Why is that?
Because just about every homeowner has life insurance to pay off a mortgage in case you pass early, but not disability insurance in case you become disabled. In fact, less than 7% of all workers in the US have disability insurance of any kind.
Is it any wonder that there are so many home mortgage foreclosures due to a family member becoming disabled?