Disability insurance is important to have because if you were to become injured or ill and were unable to work your income would drastically be decreased. Typically an employer offers 50% of your pre-tax income as disability coverage. You can also insure yourself for up to 80% of your income to protect yourself from lifestyle changes if you are out of work for an extended period of time. A person can pay 1-2% of their income towards disability insurance to get up to the 80% level of coverage. The reason this is important is to ensure your cash flow is available to continue paying your bills and your long term retirement goals are not put in jeopardy by having your paycheck cut in half for a long period of time.
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