Should you decide that buying disability insurance is in your best interest, what do you need to keep in mind while shopping for plans?

Your Financial Needs

Chances are good that you’ve already done some serious thinking about your risks for disabling injuries or illnesses and how it could impact you and your family. Disability planning is sadly overlooked, but you don’t have to be unprepared.

How much disability insurance do you need to buy? Start with an honest audit of your monthly household finances:

• Add up a typical month’s worth of bills, including rent or mortgage, vehicle payments, utility bills, credit card and college loan payments, etc.
• Add in additional necessary expenses, such as groceries, gas, vehicle maintenance, etc.
• Now take into account savings accounts you could potentially tap into, assets you could liquidate if absolutely necessary, and any emergency finances you may have available.

Given these figures you should have some ballpark idea of the cash you’d need available each month to make ends meet.

Types of Disability Plans

Be aware of the various types of disability insurance plans available and how each might benefit you.

• Short-term disability insurance – provides you with an income when you’re out of work for a few weeks or a few months.
• Long-term disability – provides you with an income for a long-term disability, usually up to a couple of years or so depending on your plan.
• Mortgage disability insurance – money that covers your home’s mortgage in the event you’re disabled and unable to make payments.
• Credit card or loan disability insurance – money that gets paid to a creditor on your behalf should you become disabled. This is valuable if you have high credit card debt or a car or boat loan, and student loans.
• Branded disability insurance plans – are company specific. Make sure you understand exactly what these cover, such as a stay in the hospital or a serious long-term illness.

Who IS Your Insurance Company?

Well-known insurance companies offer similar disability products. Beware the temptation of low cost, inexpensive or “cheap” disability ads and pitches, especially in today’s chaotic online shopping environment:

• Buy disability insurance from a company that’s a familiar name in the insurance industry.
• If you’re in doubt contact the Better Business Bureau to check the reputation of any unknown insurer.
• Don’t shell out any money for a quote or consultation. Reputable disability insurance carriers willingly offer free disability coverage assessments and access to insurance agents free of charge. Agents can help you evaluate your risks for disability, introduce you to their company-specific plans, and ensure you buy a sensible plan that protects you.

Disability Plan Limitations

Remember that most insurance policies, including disability, have limitations. Ask questions specifically regarding length of coverage. For example, short-term disability coverage doesn’t last forever and mortgage disability plans are generally useful for a few years at most.