2-Minute Money Manager: Should I Get Disability Insurance?

Health insurance will pay medical bills. But if you're sick or can't work, who's going to pay other bills? Here's what you need to know about disability insurance.

2-Minute Money Manager: Should I Get Disability Insurance? Photo by --Andre Marcelo Santa Maria / Shutterstock.com

Welcome to your “2-Minute Money Manager,” a short video feature answering money questions submitted by readers and viewers.

Today’s question is about disability insurance; specifically, whether short-term or long-term disability insurance is worth the money.

Watch the following video, and you’ll pick up some valuable info. Or, if you prefer, scroll down to read the full transcript and find out what I said.

You also can learn how to send in a question of your own below.

For more information, check out “How Will You Live If You Can’t Work? Disability Insurance 101” and “14 Insurance Products That Are a Waste of Money.” You can also go to the search at the top of this page, put in the word “disability” and find plenty of information on just about everything relating to this topic.

If you’d like to shop for disability insurance, we can help. Click here to get quotes from multiple companies. And if you need anything from a better credit card to help with debt, be sure and visit our Solutions Center.

Got a question of your own to ask? Scroll down past the transcript.

Don’t want to watch? Here’s what I said in the video

Hello, and welcome to your “2-Minute Money Manager.” I am your host, Stacy Johnson. This two-minute answer is brought to you buy MoneyTalksNews.com, serving up the best in personal finance news and advice since 1991.

Today’s question comes to us from Liz:

“Is it worth it to enroll in one of those programs that covers me if I become ill or unable to work due to an accident?”

I’ve got three things for you, Liz:

Thing No. 1: Understanding disability insurance

What Liz is describing is disability insurance.

If you get hurt or sick, hopefully you’ve got health insurance that’s going to pay your medical bills. But what’s going to pay your other bills? Who’s going to pay your mortgage if you can’t work for months? Who’s going to pay for groceries?

That’s what disability insurance does. It replaces a portion of your income so you can continue to meet your obligations if you can’t work after the sick leave runs out.

Thing No. 2: Types of disability insurance

There are two types of disability insurance: short-term disability and long-term disability.

Short-term disability insurance typically pays out for three to six months. Long-term disability can cover you for two years, 10 years or even until you reach retirement age.

Ever see those Aflac commercials with the duck? That’s short-term disability insurance. It’s called supplemental insurance, and it’s most often offered by employers. You can buy it outside of work, but generally speaking it’s an employee benefit.

Long-term disability can also be offered by your employer, but you can buy it yourself as well.

Thing No. 3: Do you need it?

You may think, “I don’t need disability. I’m already covered by workers’ compensation and then there’s Social Security Disability Insurance as well.” True, but workers’ comp only applies to accidents at work. Qualifying for Social Security Disability Insurance isn’t easy. And neither one of these solutions pay much.

When thinking about disability insurance, start by asking yourself some questions. For example, how risk-averse are you? If you’re afraid of losing your income due to an accident or illness, then the case for this insurance becomes more compelling.

I personally have never had disability. Why? Several reasons. I’m healthy and come from a healthy family. I work in an office environment, so I’m not likely to get injured. I have a lot in savings I could rely on should something happen. My wife also brings in a good income, and we don’t have kids.

These are reasons I’ve never had disability insurance. But even if you’re in the same situation, that doesn’t mean you shouldn’t purchase this coverage. If losing your income could cripple your family, or if you can get insurance cheap through your employer, it might be worth considering.

Bottom line: Do a lot of reading before you even start looking at this type of insurance. It’s not cheap, and there are lots of variables, such as:

  • When does it kick in?
  • How much of your income does it replace?
  • How long does it last?
  • How disabled do you have to be?

If you decide you want some quotes, I can hook you up: Click here to get quotes from multiple companies.

Liz, I hope that answers your question, and I’ll see you all next time!

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The questions I’m likeliest to answer are those that will interest other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.

About me

I founded Money Talks News in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.

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Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Stacy Johnson
Stacy Johnson @moneytalksnews
I'm the founder of Money Talks News and have spent the last 40+ years in the personal finance trenches. I'm a CPA, author of a few books and multiple Emmy recipient. I'm ... More

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