In this article today I would like to discuss several tips, tricks, and techniques that you can use to make sure that you are able to continue paying your bills if your income stops due to an illness.
The recession that started in late 2008 and has continued into 2010 has made it particularly hard for many Americans to get by. Even for those of us who are lucky enough to still have a job, the cost of everything seems to be rising from day to day making it harder to make ends meet. What would you do if you suddenly found yourself out of work because of an illness that you have no control over? That’s what I’d like to talk about today.
In my opinion, everybody should have disability insurance yet hardly anybody ever talks about it. First of all, what is disability insurance? Quite simply it is insurance that pays you when you become disabled and can no longer work.
What makes a good disability insurance policy? Well let’s talk about that… the first thing you need is a policy that covers at least 40% or better yet 60% of your take-home pay. When I say take-home pay I mean the actual money you take-home. The benefits that you get from disability policies are usually tax-free. The more money your disability policy pays out the better, but the more money it pays out, the more expensive the policy will be so a good rule of thumb is 40 to 60% of which will need to live.
If you’ve already planned for your retirement then you don’t need to factor that in to your disability policy. Therefore you only need your policy to cover you during your working life. If however, you have not factored in or began saving for retirement, then make sure your policy pays out enough money for you to save for retirement as well.
Next, make sure your policy has as short a waiting period as is possible before you begin receiving benefits. The shorter a waiting period, generally speaking, the higher price policy will be so here is a fun little strategy that can save you money…
Purchase a policy that has a 90 to 120 day waiting period. I realize that is 3 to 4 months and many people can’t afford to wait 3 to 4 months in order to start receiving benefits. The trick here is to save up yourself right now 3 to 4 months worth of living expenses and that may be cheaper than the extra expense of premiums you will pay over time buying a disability policy with a shorter payout period.
So there you have several tips, tricks, and techniques that just about anybody can use to make sure your bills continue to get paid even if you lose your job due to a sudden and unexpected illness. A little planning in advance can go a long way and save you a lot of heartache and misery.
