Disability insurance is basically insurance for your income. If you become sick or injured, you may be unable to work. And health insurance may only cover some of the cost of your medical procedures and can’t help you pay other bills. If you miss work and can’t earn a paycheck, you may struggle to pay your mortgage, car payments, or other bills.
Without income, even temporarily, many families could have a hard time paying bills. The majority of Millennials and Gen Xers say they would feel a significant financial effect if they were unable to work for six months because of an accident or illness.
And while many people may think disability is mainly caused by injury, more disabilities are caused by illness than injury, including common conditions like heart disease and arthritis. Another myth is that most disabilities occur at work. But only 5% of all disabling accidents or illnesses occur at, or are related to, work.1 Thus, most disabilities are not covered by workers’ compensation.
What can you do to protect your income in case you become disabled?
There are many types of income protection that can help you plan for unexpected costs. At work, your employer might offer disability insurance, as well as supplemental coverage that helps cover more than just your baseline income. Individual disability policies, available through a financial representative, can be the most long-term and reliable sources of income replacement. Policies that are tailored to you and stay with you after you leave your current job can help make sure you’re doing the most to protect your family’s lifestyle and future.
By having the necessary protection in place, realizing where the gaps in your health insurance are, and talking through some of the possible income protection solutions with a financial representative, you can help make sure your family will be able to afford the costs that come along with health care.
Meet Dr. Feranmi Okanlami. After suffering an unexpected accident, his disability insurance helped him continue to pursue his dream, while also opening up new avenues for him to find success. Watch his story to find out more.
Many Americans have health insurance that doesn’t cover all their medical needs, either because the deductibles are too high or because the policies only pay for part of the bill. We can only expect so much from health insurance, but the good news is there are other ways to protect your finances in the case of an unexpected medical expense.
When you’re planning your finances, remember to add a line item for a flexible spending account (FSA) or a health savings account (HSA). These are savings options with tax benefits that help you put aside money to cover health care costs. There are also insurance options to help close the gap in your health insurance. These include accident, critical illness, cancer, and hospital indemnity insurance, and they provide you with direct payment depending on what treatments you receive. You can opt into these policies through work or directly from an insurance company to help protect you, your finances, and your family from unexpected health costs.
What is a flexible spending account?
A Flexible Spending Account allows you to put money into it that you can use to pay for certain out-of-pocket health care costs. You don’t pay taxes on this money. This means you’ll save an amount equal to the taxes you would have paid on the money you set aside. Employers may make contributions to your FSA but aren’t required to.
What is a health savings account?
HSAs are used specifically to pay for approved health care expenses, and they’re on the rise as employees look for ways to manage the costs of high-deductible health plans (HDHPs), which have become more common in recent years. If you’re an employee with benefits, an HSA is funded by using deductions straight from your paycheck that do not get taxed. Learn more about HSAs.