Getting disability income insurance
Disability income protection is an insurance option designed to help you meet your living expenses if you have to leave work for an extended period because of an injury or illness. A disability policy claim will pay a percentage of your salary if you have a car accident or have to be confined to bed due to illness.
Some advisers consider disability insurance more important than life insurance, because the chances of suffering a disability are statistically much higher than the chances of an untimely death. It can be difficult to get, however, and as a college student you need to carefully consider if this type of insurance is right for you.
Different kinds of disability income insurance
An "own occupation" disability income policy pays a set monthly amount if your health problem prevents you from attending to your current job, even if you are fit enough to work at a different job. In other words, your disability is defined in a way that is specific to your preferred line of work. An "any occupation" policy is different. Any occupation policies define disability as the inability to do any kind of work. "Own occupation" policies are usually more expensive than "any occupation" policies and are available to people in a limited number of occupations.
Disability income insurance is available on both a short-term or long-term basis. Short-term policies pay benefits for up to two years. Long-term policies pay for various lengths of time. This may be up to two years, up to five years, until retirement, or for the rest of your life. Short-term and long-term policies are sold individually, through group disability plans offered by employers, or through unions and professional organizations.
Disability income insurance may not be as high a priority for college students as renters' insurance, car insurance, and medical plan coverage. Here are three reasons why:
- College students generally don't earn a lot of money, and the incentive to protect modest levels of part-time or Work-Study income may not be strong enough to justify buying a disability policy.
- Group disability policies offered through employers are usually easier to get than individual policies, which are often somewhat expensive. However, college students are less likely to hold the types of permanent jobs that offer group disability plans.
- Pre-existing medical conditions for which you were treated prior to your application for disability income insurance may exclude you from coverage.
Disability income insurance can be hard to qualify for and requires that you have an income to protect. Once you enter the workforce and start to raise a family, however, this kind of protection will probably rank high on your list of insurance needs.