Disability Insurance: Find What You Have With Your Employer First!
My manager recently had a herniated disk and missed more than 2 months of work. He will also probably miss the entire month of August which incurred not only an increase of my daily work but also raised concerns in regards to disability insurance. I am now a father of two beautiful children and I am making about 70% of our family income. I definitely can not afford becoming disabled without a good insurance plan.
While doing my CFP, I learnt that you have better chance of being disabled for a short term period than passing away before the age of 60. Most people think about their life insurance need and get the proper coverage. However, what about disability insurance? Are you well covered?
This is what I had to find out by checking at my employer’s disability plan. Knowing that my employer was entirely paying for the premium, I didn’t expect much than having a free wheelchair or a bag of peanuts. Instead, I was quite surprised by the coverage I have.
In fact, my employer set a disability plan separated between 3 plans. The first plan is for small disability. For the first three weeks, I am covered at a 100%. Then, the second plan comes into play. It will pay for 85% of my income for the 4th week till the 26th week (about 6 months). After 26 weeks, I will still get 70% of my salary till I receive my pension (I guess until the age of 65?).
After reading Brian Poncelet’s comment on employer’s disability plan covering only 60%, I started to freak out. Knowing that I have one of the best employer’s insurance plans makes me feel better. However, I would still have to calculate my real need to know if 70% of my salary would be enough to cover all our expenses. But worst come to worst, with 70% of my salary, we will still be able to keep our house and a big part of our lifestyle. This is great news and a great relief.
I really think disability insurance is being a must when you have a family to support, especially if you represent the main source of income in your house. However, before starting to panic, you might want to check your employment benefits. You might be covered for your needs already!
