Disability Insurance Reductions

Everyone wants to get their insurance as reasonably priced as they can. While disability insurance tends to be expensive, there are things that you can do to keep the price as low as possible. Here are a couple of common sense approaches to reducing your costs:

  1. Select a longer waiting period before benefits start.

    If you can wait longer than 30 days for benefits to start, you will save money on your premiums. This is the same principle as raising your deductible on your auto or home insurance you reduce the risk to the insurance company and so you'll pay less money.

In order to be able to handle this, you'll have to do some financial planning. Usually, you'll need to have at least a couple of months worth of salary available as savings in order to do this comfortably. Most financial planners recommend that you have at least 6 months salary in savings, in order to buffer you from financial challenges. If you have that much saved up, you can easily handle waiting a longer period for benefit's to start.

  1. Select a shorter benefit period.

    You could elect to have benefit's continue only until you can retrain for another job. This is a gamble on your part. If you end up with a serious accident or illness that leaves you completely disabled, you could have a problem.

One option is to select benefit's payable to age 65 when you would normally retire - instead of lifetime benefit's. Although a small change, this should also save you some premium cost.

In fact, you are generally better off to choose to select benefit's payable until age 65 than to select benefit's payable only for a specific time period and then re-train. Why? Well, you don't want to have to collect for a lifetime, but if you are in that position, you could have many years to retirement age and no benefit's. You may or may not qualify for social assistance, and as I have noted elsewhere on this site, getting social assistance is getting harder, not easier. While you will save more on premiums by electing a shorter and defined benefit period, you could find yourself in significant financial difficulty when those benefit's run out.

No one wants to think that a catastrophic illness or accident could actually disable for a lifetime, but it can happen. I personally know of a man who took a serious stroke at age 42 and was unable to work from that day until his death in his 70s. His wife and children had to support him and also pay for specialized renovations to the family home to accommodate his restricted mobility. While this certainly doesn't happen every day, it CAN happen. Disability insurance is about ensuring that you can weather a health crisis, regardless of how severe.

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