There are times when a sudden illness or accident will make it impossible for someone to do the everyday things that need to be done, let alone go to work. In these moments, even the simplest tasks, like getting out of bed or making a meal, can become a huge challenge. During such a time, money becomes an even more pressing concern, as income suddenly stops, but expenses continue to pile up. The lack of a steady paycheck can lead to financial strain, and without a strong emergency fund, a person might struggle to make ends meet. This is especially true for individuals who rely on their income for day-to-day living or to support their family.
That’s why more Americans than ever are incorporating disability insurance into their financial plans, recognizing it as a vital safeguard for both their families and their assets in the event of an unexpected crisis. Disability insurance provides a financial cushion during times of illness or injury, allowing individuals to focus on recovery without the added stress of financial instability. This type of coverage can help maintain the household’s financial health, paying for medical bills, everyday living expenses, and even mortgage payments, ensuring that the family doesn’t suffer during a period of difficulty.
As awareness about the importance of disability insurance grows, more people are prioritizing it as a necessary part of their overall financial security plan. This blog contains disability insurance tips to keep in mind as you navigate this complex world.
Employment Benefits
Companies understand that employees want extra protection from unexpected life events, and many of them provide disability insurance as part of a regular benefits package. On the one hand, this is a strong worker investment strategy and makes procuring this protection easier for those at the business. At the same time, though, it makes disability insurance a more expensive pre-tax deduction in every pay period.
Reuters wrote that due to this discrepancy in expense, some employers are helping out by simply providing the benefit themselves, but this is not yet the norm. The source stated about 85 percent of mid-sized entities offer these benefits, but most participants only get minor discounts by going through a group plan or a special corporate-based program. While this insurance remains an option for many workers, therefore, not all of them will want to pay the hefty surcharges associated with procuring it through their companies.
Voluntary Searching
Getting insurance like this is very possible for those looking outside the traditional scope of employment. Many individuals may not realize that they can secure disability insurance on their own, independent of their employer’s offerings. As Investors Online pointed out, obtaining personally-sourced disability insurance is not only accessible but also provides financial benefits beyond standard employer-provided coverage. One significant advantage is that these private disability insurance plans allow individuals to avoid extra taxes that are typically associated with workplace insurance claims. This means that the payouts from personally-sourced disability insurance are not taxed, unlike those received through employer-sponsored plans, which are subject to income tax.
This can lead to substantial savings for policyholders, as they can keep the full amount of their benefits without worrying about tax deductions. For those seeking greater control over their financial security, personally sourced disability insurance can provide a smart, tax-efficient alternative to relying on work-based plans.
Pay More Now, Save Later
This will make getting these benefits upfront more expensive, the source noted, as the 5 to 10 percent discount offered through group packages can be attractive initially. However, when considering the full scope of a financial plan, the lower upfront cost might not always offer the best value. While it may seem like a good deal at first, the long-term benefits of a private policy often outweigh the group discount. With a private policy, the holder may pay slightly more initially but will benefit from not having to pay taxes on regular installments or any payouts, providing more value over time.
Additionally, there are ways to make the private policy even more affordable. Renewing early can lock in better rates, while comparing providers ensures the best coverage at a competitive price. Seeking out discounts or bundling policies can further reduce costs, making private disability insurance a smarter, long-term investment. With careful planning, a private policy often proves more cost-effective overall.
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