Disability income insurance replaces some of your income if you become ill and unable to work. But how long do you need to keep it? When you reach a certain age, do you no longer need disability income insurance?
Should You Drop Disability Income Insurance Based on Your Age?
Several factors influence when you might discontinue disability income insurance—and your age when the events occur varies by individual circumstances. Disability income insurance supplements your employment income, so regardless of your age if you’re still working, you might need the coverage. Consider a few scenarios.
- Your retirement age – When you fully retire, you don’t have employment income. And you might not need disability income insurance if you become ill after retirement. If your retirement benefits are enough to supplement your income, you can consider discontinuing the insurance. Still, if you retire and are under age 62, you might decide to keep disability income insurance until you receive social security benefits.
- Your employment type – If you’re self-employed, consider if you have enough savings to cover an extended illness that prevents you from working. Otherwise, it may be wise to keep the policy until it expires.
- Social Security income benefits – If you think your Social Security benefits are enough, and you don’t think you’ll need extra income if you become disabled, it might be time to drop your policy. If you are disabled, you can find out if you qualify for social security disability benefits.
- Policy expiration – Most disability income insurance policies end at age 65 when you begin to receive retirement benefits, social security benefits, or both. Many policyholders decide to keep disability insurance until the policy ends.
Is Keeping Disability Insurance a Waste?
Although it may seem that keeping disability insurance is a waste of money, consider some statistics from the Centers for Disease Control and Prevention (CDC):
- Each year about 43 million people have emergency room visits.
- Six in ten U.S. adults have a chronic disease.
- Four in ten U.S. adults have two or more chronic diseases.
- The leading causes of death and disability include heart disease, chronic lung disease, cancer, stroke, Alzheimer’s disease, diabetes, and chronic kidney disease.
- Lifestyle risks for chronic illness include smoking, excessive use of alcohol, poor nutrition, and lack of exercise.
A healthy lifestyle helps prevent chronic illness, but there’s no guarantee. An accident or unexpected illness can happen to anyone. Disability income insurance eases the stress of being unable to work and losing your income.
What If Your Job Provides the Insurance?
If your employer provides disability income insurance, you may not need to purchase insurance from an external source. But consider your circumstances, financial responsibility, and family size with the factors below:
- Amount of coverage – What percentage of income replacement is available with your employer-sponsored insurance?
- Coverage period – When does coverage begin and end if you become disabled and cannot work?
- If you’re no longer an employee – If you leave the company or lose your job, what happens to your disability income insurance? Will you lose it?
On average, disability insurance premiums are three to four percent of your income. You can customize coverage to match your needs. Read our disability income insurance page for information on what a policy can cover.
At Hunt Insurance, we’ll give you a free, no-obligation quote. We communicate openly and honestly to prevent you from being over- or under-insured. Call or e-mail us to start the conversation.