Disability and life insurance

Should something happen to you, disability and life insurance can make a significant difference in your financial well-being. While you may think your employer’s benefit plan covers you, it is worth making sure to avoid any surprises.

Even if you have insurance through your employer, you may not be getting all the coverage you need. Will you and your family be able to live on the amount of the benefit provided? Is the duration of the benefit sufficient? If both the answers are no, now is a good time to consider supplemental coverage.

Here is some helpful information to get you started:

Tip 1

Consider life insurance

We mostly think parents of younger children are the ones who need life insurance. But empty nesters and retirees should consider it as well. Naming adult children or grandchildren as beneficiaries for your life insurance policy may enable them to accomplish important goals after you’re gone.

Tip 2

Understand the various definitions of disability policies

Some policies cover you in the event that you can no longer perform your own occupation. Others cover you only if you can no longer do any occupation; a loss of earnings option makes up the shortfall between what you were earning before you were disabled and what you’ll earn after.

Tip 3

Define your time period

The average long-term disability claim is less than three years.1 You can purchase a policy for various time horizons, including up to your normal Social Security retirement age or for life. Keep in mind that the longer your desired horizon, the higher the premium.

Tip 4

Understand that premiums go up with age

The older you are, the more you can expect to pay for your policy. So looking into disability or life coverage while you are younger could save you in the long run.

This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

1 Source: Gen Re, 2012 Gen Re Disability Fact Book, December 2012 (latest available)
2 Source: U.S. Bureau of Labor Statistics, December 2012 (latest available)