Disability income insurance is a protective feature chosen by many people who want to protect their earnings should they experience an illness or injury and not be able to return to their current job. A loss of salary could be financially devastating for a family, and so policyholders put disability insurance into place so that they are not financial vulnerable if their physical (or in some cases, mental) condition causes them to have to leave work either temporarily or permanently.

Clearly the benefits of disability income insurance are numerous and most policyholders understand that by enacting a disability insurance policy they are protecting their family’s ability to continue to live their life comfortably. But beyond the ability to pay utilities, buy food, and pay for the day to day expenses that come with living a life, disability insurance allows policyholders to protect their financial investments. This protection is extended to everything from savings accounts and 401k investments to college savings and IRA accounts – anything that we would have to quickly access and ultimately deplete if we found ourselves without a salary for an extended period of time. But beyond that, disability insurance protects our largest financial investment – our home – from vulnerability.

Some of the other things to consider when examining disability insurance include:

* The length of the policy in question. Not every disability insurance policy is the same; the terms are different from one policy to the next. You may be interested – or only able to afford – a shorter term policy; or you may be interested in a long term disability insurance policy that will cover you up until the age of traditional retirement. Make sure you are comparing similar policies when you are comparing prices.

* The amount received should the policy go into effect. If a disability does arise and you are forced to enact your policy, you need to know how much you will be receiving. Every disability insurance plan is different; be sure you understand all the details of what you are getting under your plan. It doesn’t make sense to purchase a policy for which you cannot afford to pay the premiums; the trick is finding a balance where you have the appropriate amount of affordable insurance.

* What, if any, are the exclusions of the policy. Some disability insurance policies come with exclusions written into the plan that may affect the amount you receive or for what you will be covered. Take the time to get to know your disability insurance plan intimately so that you know what could affect your ability to make a claim.

With disability income insurance, there are specific things that potential policyholders should consider when comparing and contrasting policies including:

* The reputation and experience of the disability insurance company with which we are considering working. Any insurance agency that a consumer considers should have a healthy – and longstanding – reputation in the industry, as well as strong financial backing.

* The way in which the company defines a disability in its policies. Your idea of a disability may be a stark contrast to what is defined as a disability through a particular carrier. Be sure you know the particulars of what will qualify you to receive your disability insurance benefits.

* Whether the company requires a medical exam in order to be qualified for coverage; and whether ongoing medical examinations are required in order to maintain or renew the policy.

* The amount of coverage that you can afford in terms of premium payments today. In other words, how much coverage does your disability insurance premium payments afford you in terms of benefits?

* The wait time for benefits to being released. There are different wait times associated with different types of policies following the validation of a disability; be sure you know what you are facing under these circumstances.

Disability insurance is similar to other insurance policies in that it is meant to protect policyholders against the unexpected; in the case of disability insurance the unexpected can be an illness or injury that prevents the policyholder from returning to their job and earning a salary. In such a case, the disability insurance policy would become activated and the policyholder would begin to receive their benefits to make up for their lost wages.

The price of a disability income insurance policy obviously differs from policyholder to policyholder depending on the benefit amount chosen, the length of the policy, and the time period that the policyholder is willing to wait between the time they are deemed disabled and the time that they begin to receive their benefits. Traditionally the longer the wait time the lower the premiums that the policyholder will pay for the disability insurance policy.

Choosing a benefit amount, however, is by far the most critical portion of applying for a disability insurance policy. In order to choose the most appropriate amount, a policyholder must take into account every last expense for which they are responsible including house and car payments, debt, utilities, food, fuel, and so forth. To this end it may be helpful for potential policyholders to put together a comprehensive spreadsheet where they track their expenses for a few months before applying for their disability insurance policy.

In the wake of my accident I had enormous physical and emotional trauma to deal with; our finances were, quite honestly, the last thing on my mind and I know my husband did his best to hide a lot of what was going on from me so that I could just concentrate on getting better. But before long it became absolutely necessary that we turn our attention to our finances as we were beginning to receive notices from bill collectors and were even starting to get preliminary foreclosure notices on our home.

With no disability insurance we had been vulnerable to my loss of a paycheck and now instead of being able to focus on the task at hand – getting better and still parenting our children, even with limited physical abilities – I was worried about having our home taken away from us in the midst of this already stressful time.

We got enormously lucky. Our family came together and helped pay the back mortgage payments as well as the other outstanding bills that had come due while I had been out of work. And just a few short months later I was back to work and earning my paycheck again. I am still undergoing physical rehabilitation but I am getting stronger everyday and we are working our way back to being financially stable. Now, just as we pay our life insurance premiums, we are paying premiums on our new disability income insurance policy that we have taken out for both me and my husband so that we may never again face that kind of vulnerability.

There are limited options for those who have become disabled at such a young age. They may have to turn to their savings, investments, and perhaps even the equity in their home in order to make ends meet – and ultimately this only goes so far. Because social security is meant for those aged sixty-five and older it is very difficult to receive benefits as a result of a disability. In fact, over fifty percent of those that apply for benefits as a result of a disability are denied. But with disability insurance in place, those that are facing financial difficulties because of a disability are protected.

Disability insurance plans are an essential component of the protection put into place for families. Just as we buy life insurance to offer financial protection for our families in the event of our death, it is equally important that solid disability insurance be put into place to protect our families in the event that we are unable to return to work due to a disability.

With disability insurance, policyholders are protected from the financial turmoil that comes with losing a paycheck either temporarily or permanently. Rather than depleting savings and trying to qualify for social security benefits, those who find themselves facing a disability can turn to their disability insurance provision for the financial protection they deserve.

Several years ago I was just starting out in my professional career, having recently graduated from college. My education was pursued a bit later than most as I had gotten married and had two children before I went back to school and got my degree. When I was offered my job I was happy to accept it, as it was everything I was looking for professionally and offered the salary and benefits that were so important in helping to sustain my household. Of course my husband and I had thought nothing of purchasing life insurance after we were married – and even of increasing the amounts on the policies when we had the kids – but we were less inclined to purchasedisability insurance. We were managing to pay our bills with our salaries but the truth was that we just didn’t want to spend any more money on insurance; and we honestly felt like it was something that we wouldn’t need. Boy, were we wrong.

Approximately thirteen months after starting my new job I was in a terrible car accident. It was no one’s fault really; just the result of a dark, rainy night, poor visibility, and slippery roads. I broke several bones, suffered head trauma, and required months of physical therapy. My husband and I were so focused on dealing with the physical repercussions of my situation that we only turned an obligatory eye toward our finances when it became necessary.

Which it soon very much did.

In the next post, I’ll continue my story of what the decision not to purchase disability insurance meant for our family.

However, with the creation of solid disability insurance plans, a family can feel secure that they are protected no matter what their circumstances. Should a household earner become ill or suffer an injury that causes them to be out of work for a period of time – or permanently – disability insurance will become engaged and policyholders will begin to receive payments so that they are able to keep afloat during an already difficult time.

Creating appropriate disability insurance plans, therefore, comes down to really examining your household expenses and what it takes for your home to manage on a monthly basis. It is important to take into account every expenditure you make month to month – from gas (and this is an expenditure that is currently on the rise) and food to mortgage payments and repayment of debt. It is important to understand what the loss of a paycheck would mean to the payment of these necessities and how else a family would survive without a disability insurance policy in place.

By examining all of these expenditures a would-be policy holder can choose the policy that works best for them in terms of payout versus affordability of premiums. An additional feature that must be chosen is how long the wait time is before the policy will pay out; if your family has savings that they can rely upon for a short period of time – without depleting the entire savings – then you can choose a longer wait time and therefore reduce your premiums. If, however, you have no backup financial options you may want to choose a disability insurance policy with the shortest wait time in policy payouts.

Disability insurance is another necessity, especially if a family is completely reliant on an earner’s paycheck; and really, who isn’t in this day and age? In fact, most of us are living paycheck to paycheck in this struggling economy and it’s becoming more and more difficult to make any sort of headway. Those of us who are lucky enough to have built up some savings certainly don’t want to see that nest egg squandered in the face of a disability. But that is exactly what happens to those who do not have any disability insurance to protect their families. In such situations, an earner who is hurt or becomes ill and is not able to return to work will find that they have precious little to rely upon. Very quickly, savings accounts are diminished, investments are accessed, and even homes are sold – all in an effort to keep up with the day to day expenses that are faced by the average person in today’s society.

Examining comprehensive disability insurance plans, however, allows consumers to maximize the protection provided for their families, so that – no matter what the circumstances – family members will be okay.

In the next post, we’ll discuss some of the ways in which consumers can create solid disability insurance plans.

But – as we quickly discover – both of these scenarios are inaccurate. For one, we are all going to die. And if we die while we still have young children – not to mention a spouse – who are dependent upon our income life insurance will be paramount to their financial survival. Further – as we also discover as we continue to have life experiences and see first-hand what can happen – illness and injury is not in any way confined to a particular age group. In fact, the younger we are when we experience a disability the more financially vulnerable we are; we have not had the time to build up savings accounts that may help to support us – including retirement accounts, may not have enough equity in a home to call upon, and may (as most people do in this age group) be living paycheck to paycheck. What happens when that paycheck suddenly disappears?

Disability insurance is meant to cover those who have experienced an illness or injury and are not able to return to work. This policy will just as easily cover someone who must take a short sabbatical from work as they recuperate as it does someone who finds themselves permanently disabled and unable to return to work at all. It is only a matter of finding the policy that works best for you and your family. Make the purchase of disability insurance something that you do in the beginning of your career – as one of the steps that you take in protecting your future and that of your family’s future.