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All You Ever Wanted to Know About Insurance

Disability insurance can replace income, cover overhead expenses

Benjamin Franklin famously said, "Nothing is certain except death and taxes."

While we can't always agree on taxes, there's no denying that each of us will die eventually. Because this is accepted fact, people tend to be receptive to having a conversation about life insurance.

When it comes to interfering with our working lives, however, disability is a more certain prospect than death. Yet the common mindset toward disability is that it only affects other people.

That mindset is mistaken.

The Social Security Administration notes that for 20-year-olds, more than one in four of them will become disabled before they reach retirement age. For someone age 42, the probability of becoming disabled before retirement is approximately 3.5 times higher than the probability of dying before retirement.

Such statistics may reinforce the wisdom you had to obtain disability insurance. But if you're among those who have put off or never had a serious conversation about disability insurance, then perhaps this will remind you to act.

Start by asking yourself: Can I pay my bills without my income? If the answer is no, then you should consider disability insurance as a way of protecting your future income.

An individual disability insurance policy could cover 70 to 85 percent of your income; you can't replace 100 percent as insurance companies want to give you incentive to work.

Most disabilities occur outside of work. You could suffer a stroke while shopping, be involved in a car accident, fall down the stairs at home. Never mind those close calls you've had through the years.

While death would cause enormous heartache for your survivors, you would not be a liability to your family. If you become disabled, on the other hand, not only is your income at risk but your living expenses remain. This can put an enormous strain on a family and a marriage, even when you vowed to be true "in sickness and in health."

Disability insurance is not inexpensive: premiums typically cost 1.5 to 3 percent of income. But it's far more expensive not having disability insurance when you face the prospect of a long-term loss of that income.

Death and taxes may be the only certain things. But it's all of those remaining uncertainties that you should think about when considering whether you need disability insurance. Many things can happen that don't kill us but inhibit our ability to earn a living.