Disability insurance is income insurance. With a policy you can collect a portion of your income if a disability prevents you from working or hinders your ability to earn the income you’re accustomed to.
It’s by far the best way to maintain financial stability and continue to earn a paycheck when you’re unable to work. But who you purchase your policy from and when you buy it can have a huge impact on your benefits and how much your monthly premiums will be.
So when is the right time to purchase disability insurance?
Here’s what you need to know.
Disability Doesn’t Mean Disabled
Some people have the misconception that to be disabled you must be unable to walk, be blind or deaf, or be bound to a wheelchair for life. That is simply not the case.
In regards to disability insurance, a disability is any medical condition that limits your activity in such a way that prevents you from working. Disability goes well beyond the scope of physical impairments that you can see — it includes a wide variety of less obvious medical conditions, including cancer, heart disease, and respiratory illnesses.
Because disabilities are wide-ranging, something as simple as nerve damage in the hand could render you disabled if, for example, you are a surgeon that relies on your hands to perform surgery.
Anyone Can Suffer a Disability at Any Time
According to the Council for Disability Awareness, more than 1 in 4 of today’s 20 year olds will become disabled before they reach retirement age. Disabilities are not always age-related, so they can strike at any time.
While your family medical history can play a role in genetic diseases and conditions that you might develop throughout your life, lifestyle choices are a significant factor as well. That means that anyone can suffer a disability at any time in their life.
From a car accident that results in a physical injury to a diagnosis of cardiovascular disease or arthritis, anyone can feel great today and be rendered disabled tomorrow. For this reason alone, it’s best to purchase a disability insurance policy when you become financially independent. For most people, that’s when they’re in their twenties or early thirties.
Your Age Affects Your Rates
There’s another great reason to purchase a policy when you’re in your twenties or early thirties:
Along with your geographical location, job description, and gender, your age is a major factor in regards to how much you’ll pay for disability insurance, and the reason is twofold.
You’ll pay less in monthly premiums if you purchase a policy when you’re 28 than if you wait until you turn 40 or 50. Your current health conditions at the time of purchase affect your rates too, and since younger people tend to be “healthier,” it’s yet another advantage.
When buying a policy, keep in mind that you’ll get the best policy terms from the most reputable insurers. Check out this article to learn about the top disability insurance companies in the U.S.
Benefits Can Last All the Way Until Retirement
When you purchase a policy, the insurance company will allow you to choose from different benefit periods. Benefit periods cover the span of time in which you can collect benefits, and they can be two years, five years, ten years, or all the way up until you hit retirement age.
Disability benefits end when the benefit period ends, so it’s always best to choose the longest benefit period possible. Purchasing a policy when you’re young, at say thirty years old, means you could collect benefits all the way up to the age of 67. That’s 37 years of income that you can earn if your disability lasts a lifetime and prohibits you from ever returning to work.
The bottom line is this:
The younger you are when you choose a policy, the more benefits you can collect over the duration of the policy, if you choose a benefit period that will carry you through retirement.
Buy It Before You Need It
The key to purchasing disability insurance is to buy a policy before you need it.
Pre-existing conditions can make you ineligible for a policy. Some insurers will sell you a policy with a pre-existing condition but then state that any disabilities that arise from those pre-existing conditions will not qualify you to collect benefits.
Don’t wait until you start to see signs of deteriorating health to buy disability insurance. Buy it when you’re as young and healthy as you can be.
If you’re not already covered, the time to buy disability insurance is now. Disability insurance is income insurance, and the younger you are, the more income you have to lose. Without it you’re putting your income and your future at risk.
Purchasing a policy will require you to pay monthly premiums, but the peace of mind that comes with coverage is well worth the cost.