Is long term disability insurance worth it?
Good question. I frequently talk to my own clients about the need for disability income insurance. Everyone knows about life insurance and understands their need for it (especially if they have dependents) but disability income insurance is relatively unknown. That's unfortunate, because it's arguably more important (find out Why You Need Disability Insurance).
Disability income insurance provides you with a monthly income if you are unable to work, either in your own occupation or in any occupation whatsoever (depending on your coverage). The payments will usually last until you resume working, turn 65, or pass away. This allows you to focus on your rehab and recovery without the added emotional and financial burden of dealing with a loss of income and making sure the bills are paid. Depending on the policy you buy, you might even have enough to help pay for transportation and other additional expenses.
That being said, not everyone needs to buy this type of insurance. If you work for a large company, you probably already have this coverage as part of their group benefits package and have no need to buy your own. Be sure to check!
Also, if you are already financially independent, are a hands-off business owner, or earn passive income of some sort, you probably do not need this type of insurance since you will not need to put in hours at the office to make ends meet.
So the answer for most people is a resounding yes. Without income, most people would be hard pressed to pay the bills, even if they have a healthy emergency fund. Disability insurance alleviates that problem and provides you with income during your downtime so you can focus on getting better (see 12 Disability Benefit Riders to Improve Your Coverage to find out more).
Written by Jacques Wong
Jacques grew up around the insurance industry and began actively participating in 2013. Since then, he has gotten a Level 2 license, won Insurance Council of BC awards in 2015 and 2020 for academic excellence in the insurance licensing courses. He educates insurance professionals through PNC Learning and as a Thought Leader at ReFrame Insurance.
In his day job as an insurance broker, he helps businesses with creative risk management solutions and strategic advice when it comes to insurance.
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