Disadvantages of Having Disability Income Insurance

If an individual does not have the benefit of an employer paying the cost of disability income coverage, the cost or premium needed to buy the coverage could be substantial. This usually will be the case with self-employed persons. Typically, the older individuals become, the less likely they are to be inclined to purchase disability income insurance. According to one study, 75 percent of Americans age eighteen to forty-four were willing to pay for disability coverage but only 56 percent of Americans between the ages of forty-five and sixty-four were willing to pay for the cost of the coverage. But it may be that the viewpoint that this type of coverage is costly is not entirely justified. According to a study conducted by an insurance company, the typical cost for disability income coverage is only about two percent of the individual’s income.

If individuals do not have the benefit of their employers paying the cost of disability income coverage, the cost or premium needed to buy the coverage could be substantial. This typically will be the case with self-employed persons. Also, disability income insurance generally does not cover any of the medical or rehabilitative costs associated with being disabled. Of course, if the individual has health insurance, this type of coverage generally will pay these costs.

Reproduced with permission.  Copyright The National Underwriter Co. Division of ALM

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