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It goes without saying that it’s crucial to have a steady income to support yourself and your family. But what happens when an accident or incident prevents you from working, and suddenly there's no more money coming in to pay bills and cover expenses that continue to add up?
That’s where disability coverage can help. It ensures you'll still have the income to support yourself and your family in the event of a disability that prevents you from working. But just because disability coverage is a good idea doesn’t mean you should have to pay an excessive amount for it, so you might be interested in learning that there are ways you can reduce the cost of your disability insurance.
The benefit period refers to the length of time you're eligible to receive payments after a disability occurs that prevents you from working. For instance, if you were in a car accident and couldn’t work for two years, a retirement age benefit period that lasts until you're 67 would ensure you had money coming in for as long as you needed.
However, the longer the benefit period, the higher your premiums will be, so reducing this period can lower your costs. Many disabilities resolve within two to four years, so you might want to consider reducing your benefit period to five or 10 years to save money.
The elimination period is the waiting period between the time of the actual disability and the first benefit payment. Typically, the shortest elimination period an insurer will offer is 30 or 60 days, meaning you'll get your first benefit payment within a month or two of your disability. On the other end of the spectrum is the longer elimination period of 180 days, and the longer you can wait for your first payment, the lower your monthly premiums will be. For many people, an elimination period of 90 days is a good balance that will both lower your premiums and ensure you have money coming in when you need it.
When it comes to insurance coverage, waste and excess refer to things that you don’t need. For example, if you already have short-term disability coverage from work, then you don’t want to double up on coverage by purchasing a similar individual plan. Before purchasing coverage, determine what you need and make sure the policy you buy doesn’t come with any unnecessary coverage.
Similarly, you can also reduce your premiums by lowering the monthly benefit. For example, if you can manage a disability benefit that’s only 50 percent of your normal income, then you can drastically lower your costs.
Individual insurance plans are always more expensive than group ones, and if you have a group of like-minded individuals you can join with, then you might be able to find more affordable group coverage. As an example, if your workplace doesn’t provide you with any disability insurance, you and your fellow employees could come together to buy group coverage for yourselves. Although the quality and quantity of the benefits may be slightly reduced, you'll end up with lower premiums, and still have coverage in case of an emergency.
