close
close

Here’s why all women should consider getting disability insurance

simarik / iStock.com

simarik / iStock.com

Disability insurance protects your wages if you are unable to work due to illness or injury. But if you’re a generally healthy person, you might feel like you don’t need it. In this section “Financially savvy woman”we speak with Rachael Burns, CFP and founder of True Worth Financial Planning, about why all women, even the healthiest, should consider purchasing disability insurance.

Small Business Spotlight 2022: Name Your Favorite Small Business
Borrow from Cash App: How to Borrow Money on Cash App

What are some of the reasons women might need disability insurance during their working years?

One in four women have a disability, so the likelihood of becoming disabled as a result of illness or injury is simply too high to ignore. For most people, a loss of income due to disability would be financially devastating and the consequences could last a lifetime. Not only would they not be able to cover their current expenses, but they would also be unable to save for retirement. Single women are at greater risk because they do not have their partner’s income to fall back on.

SURVEY: Do you have a side job or another activity?

What are some common misconceptions women have about disability insurance?

  • The chances of becoming disabled are low. Today, one in four 20-year-olds will be out of work for at least a year at some point in their career, due to a disabling illness or injury.

  • They would still be able to perform their “office job” if they were injured. People often forget that many disabilities are caused by illness, not injury. Even if your job is not physically demanding, you would still be unable to perform it if you were seriously ill.

  • A member of their family would take care of them. Even if they have someone to care for them, they will likely have to cover their own expenses. Additionally, it is unlikely that any family member will be able to provide 24-hour care without jeopardizing their own finances.

  • They will receive Social Security disability benefits. Social Security disability benefits are surprisingly difficult to obtain and typically pay only $800 to $1,800 per month.

  • Their existing group coverage is sufficient. Some assume, because they have a group insurance policy through work, that they are adequately covered. However, the basic policy might not be enough to cover their needs, depending on their situation.

How can women determine if the coverage provided by an employer is sufficient?

They should obtain a copy of their policy and verify the following details:

  1. What percentage of their income is covered? Typically, disability insurance covers no more than two-thirds of your salary. You must therefore determine whether this is enough to cover your needs. Remember that in addition to covering your normal expenses, you may have to incur new costs due to your disability, such as hiring in-home care, renovating your home to make it wheelchair accessible , etc.

  2. How long is the waiting time? The longer you wait before you can start collecting benefits, the more money you need to have set aside to cover your expenses in the meantime.

  3. How long is the compensation period? Some policies provide income regardless of the length of your disability, and others only cover a certain number of years. It’s important to have a plan for when your coverage ends if you suffer a permanent disability.

What else should women know about disability insurance?

A potential disability is one of the biggest threats to your financial future. It is even more crucial for single women to have a disability insurance plan, as they do not have their spouse’s income to fall back on.

GOBankingRates wants to empower women to take control of their finances. According to the latest statistics, women hold $72 billion in private wealth, but fewer women than men consider themselves to be in “good” or “excellent” financial situation. Women are less likely to invest and are more likely to be in debt, and they are still paid less than men overall. Our Financially Savvy Woman section will explore the reasons for these inequalities and offer solutions to change them. We believe financial equality starts with financial literacy, which is why we provide tools and advice to women, by women, to take control of their money and help them live richer lives .

More from GOBankingRates

This article originally appeared on GOBankingRates.com: Here’s Why All Women Should Consider Getting Disability Insurance.