Why you should buy life and disability insurance at the same time
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- Life insurance protects your family in the event of your death.
- Disability insurance protects your income if you can't work due to illness or injury.
- Having both life and disability insurance protects your lifestyle and family.
- Policygenius can help you compare life insurance policies to find the right coverage for you, at the right price »
You work hard to provide a comfortable lifestyle for yourself and your family. But if an injury prevents you from working, will you be able to maintain your lifestyle?
"If you don't make it home and someone relies on your income to live, you need life insurance," Mark Williams, CEO of Brokers International, told Insider.
Life insurance paired with disability insurance helps manage the risk of disability, illness, or death.
Insurance supports your plans and the unexpected
What are your goals for your career, family, and other individuals you are responsible for - even if you don't have kids?
"At the end of day, life insurance is risk management" to deal with "premature death, loss of income due to illness, or disability," according to Silvia Tergas, a financial planner with Prudential.
Tergas recommends using a small percentage of your income toward disability insurance and life insurance to insure your No. 1 asset: the ability to generate income in future.
What is life insurance?
Life insurance is a contract between you and the life insurance company. You pay premiums (monthly or annually) for a payout that your living relatives will receive, known as the death benefit. Should you die, the insurance company pays the death benefit to your chosen beneficiary.
There are two main types of life insurance policies to choose from: permanent life and term life. There are different types of term life and permanent life insurance products.
Whether you choose permanent life insurance or term life insurance, you will need to go through the underwriting process. This process is how the insurance company determines your insurability - deciding how much of a risk you are and how much of a death benefit you qualify for.
Your life insurance needs change as you age, and you'll need to consider children, marriage, divorce, retirement, and caring for aging parents. The best life insurance policy for you depends on your budget as well as your financial goals.
To maximize the benefits of life insurance, it's wise to include a financial advisor, accountant, and estates attorney in your decision-making process to ensure you have proper coverage that adapts as your life changes.
| Term life insurance | Permanent life insurance |
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What is disability insurance?
To figure out whether you need disability insurance, the question to consider is: If you become ill or injured, how will you earn income to pay your bills?
Disability insurance is like insurance for your paycheck if you are unable to work. Just like you have homeowners insurance for your home and car insurance for your car, you should have disability insurance to protect your income.
When you are injured or ill and unable to work, disability insurance provides you with a percentage of your salary. There are two types: short-term disability and long-term disability.
Although many people probably have short-term disability through their employer, long-term disability insurance is the one that most people need and do not have.
For most people considering disability insurance, the focus is on long-term disability and how to decide between an "any-occupation" policy versus an "own-occupation" policy. You can use online calculators to determine how much disability insurance you need.
| Short-term disability | Long-term disability |
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Data from Guardian Life Insurance
Why get life and disability insurance at the same time?
According to Guardian Life, more than one in four of today's 20-year-olds can expect to be out of work for at least a year because of a disabling condition before they retire. Guardian Life also notes that illness causes 90% of disabilities, while injuries accounts for the other 10%.
Life insurance protects your family in the event of your death. Disability insurance protects your income in case you become injured and unable to work. The worst feeling is thinking you have coverage, only to find out you don't or it isn't enough.
Life and disability insurance require going through the underwriting process, which can take four to six weeks. Underwriting is when the insurance company collects information about your health, job, income, finances, and other personal information to determine how much they will insure you and what your premium will be. It may require a medical exam, which includes the collection of a blood and urine sample.
Some insurance companies offer a disability rider that you can add on to your life insurance policy instead of having two separate policies. However, it may be more cost efficient to have separate policies.
Talk to your insurance specialist or financial advisor to find out what options work best for your financial situation and goals.