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Monday, April 8, 2013 |

Long-Term Disability Insurance: What Is It and Is It Necessary?

I’ve written quite a few posts for MoneyMix about a variety of different types of insurance: car, health, life, rental. One type I have not touched on is one that not a whole lot of people think about, especially at my age: long-term disability insurance.

Unless you live a dangerous lifestyle or work at a high-risk job, it’s understandable why you wouldn’t consider the benefits of long-term disability insurance. However, recent estimates show that people in their 20s have about a 30% chance of becoming disabled at some level before they retire. Moreover, the average absence from work for disability reasons is about two-and-a-half years.

Long-term disability insurance provides a safeguard in the event that you must miss significant time due to disability, so that you can avoid dipping into your savings or retirement fund far earlier than you had anticipated. People who file long-term disability claims do so for a wide variety of reasons, the most common of which include cancer and muscular/skeletal issues. However, mental disabilities, accidents and pregnancy or childbirth complications also make up a significant portion of these types of claims. The length of these benefits depend on your policy and your disability. They could last for a set period of time, until you can go back to work, or until the age of 65 (as long as you are disabled).

Some companies offer long-term disability insurance as part of their group coverage programs. If yours does not, the prices for this type of insurance vary based on how much coverage you are looking for and the provider you choose. However, what is clear is that there is a fairly decent chance that you could become disabled at some point, and it’s better to be safe than sorry. Loss of earnings for any significant period of time can be catastrophic.

Consider looking up more information about long-term disability insurance and whether it would benefit you. How many of you already are covered?

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