As a working parent, would you be able to sustain your family and maintain your current lifestyle if you became too sick or injured to work and earn your current income?
For most people, the answer is no. Without a steady income, most families would suffer a great loss, and when that financial loss is the result of a health issue, the result can be even more devastating.
Fortunately, disability insurance can protect you from that outcome.
Here are the five key ways in which disability insurance can protect working parents and provide security for their dependents.
What is Disability Insurance?
Disability insurance isn’t medical insurance or supplemental health insurance, it’s actually income insurance protection. With disability insurance coverage you can collect a portion of your current paycheck if you become ill or injured in a way that prevents you from doing your current job.
While the Social Security Administration does pay benefits to people with qualifying disabilities, SSDI pays an average of $1,358 per month, and you need to be earning less than $1,350 per month prior to your disability to even qualify. For a working parent trying to support a family, that’s very little.
The better option is individual disability insurance.
Individual disability insurance policies can pay as much as 60% of your current income, and they’re available to high-income earners that make far more than $1,350 per month.
Here are the five biggest benefits of having a disability insurance policy in case you lose your job as the result of an illness or injury:
Pay Monthly Essentials
You can use your disability insurance benefits to pay for anything. That includes your mortgage or rent, car payment, utilities, and food as well as non-essentials such as entertainment and travel. There is no limit as to how you can spend the money.
It’s your money to spend however you choose.
Protect Your Current Assets
By continuing to earn a portion of your income when you can’t work you won’t have to drain your savings or sell off investments or existing assets. Disability benefits can even be used to make additional investments, so you can continue to save and plan for retirement and protect your family’s financial future as if you were still earning your regular paycheck.
Continue to Pay for Education
There are all sorts of optional riders that you add to a disability insurance policy, and some of them provide additional monthly payouts above and beyond your standard benefits. Working parents that are still paying off educational debt can add the student loan rider for extra protection.
With the student loan rider you won’t have to worry about taking money out of your disability benefits to pay back student loans. This rider gives you additional benefits designated specifically to covering your monthly student loan payments.
To learn more about the student loan rider and other riders, check out this definitive guide to disability insurance from Physicians Thrive.
Maintain Your Current Lifestyle
Most families would agree that without income, their current lifestyle would change drastically. It could mean downsizing or selling your home, trading in your vehicle for a less expensive one, or cutting back on things such as clothing, entertainment, and dining out.
When you buy your own individual disability insurance policy the benefits you receive are not subject to income tax. So even if you receive a benefit that’s 60% of your annual income, the money you’ll receive each month will be quite close to what you’re used to taking home from your current paycheck, after taxes.
Provide Peace of Mind
Like all types of insurance, disability insurance is peace of mind that if you find yourself in a difficult situation, you’ll have some level of protection.
As a working parent with disability insurance you won’t have to worry about how you’re going to care for your children, pay for their education, or provide them with the everyday necessities.
Between work and raising a family, working parents have a lot on their plate and a lot to worry about. Disability insurance is a way to ensure that one of the things you won’t have to worry about is a complete loss of income.
No matter how young or healthy you are, it’s never too early to get disability insurance. Illnesses and injuries can happen to anyone at any time, so signing up for a policy now is one of the smartest ways to protect your family’s financial future today, tomorrow, and for years to come.