Your capacity to earn a living is your most valued asset, and disability insurance safeguards that. In the event of an accident or sickness that leaves you unable to work, disability insurance can help restore some of your lost income.
Despite the importance of disability insurance to one’s financial security, it is often disregarded owing to misunderstandings about its function and the chance of the policyholder having to make a claim. Take a look at these three points about disability insurance and then decide whether or not to include it in your budget if you do, invest in life and disability insurance plan Malaysia now.
Debts Might Be a Constant Burden Later
There is a wide range of possible monetary responsibilities. But what happens to your debts if you suddenly find yourself unable to pay them?
Buying a house is a great illustration of this principle. Borrowing money in the form of a mortgage loan is typically necessary to finance the acquisition of a house. A reliable source of income is essential in order to meet this substantial financial commitment.
The money you lose from being unable to work due to illness or injury will not be covered by even the greatest health insurance plan. Only work-related injuries are covered by workers’ compensation. Paid sick leave and savings from an emergency fund might help for a little while, but it won’t last forever.
Workplace Disability Insurance is Frequently Lacking
An employer-sponsored group plan is one option to obtain disability insurance coverage. While group coverage is economical and convenient, it is rarely sufficient on its own.
Benefits are often capped in group disability insurance programs. Benefits are cut off at a specific dollar amount, which might be difficult for high-income employees. Group disability coverage is based on your base wage, therefore it does not take into account commissions or bonuses earned, and benefits are taxed. You lose your coverage if you leave your job. Even if you stay, your employer has the option to terminate the plan.
Individual disability insurance, on the other hand, permits you to choose a larger benefit level based on your total net income. Because premiums are paid with after-tax cash, any benefits you receive are not taxed.
Your Family Depends On You
There are many weighty economic choices to make before starting a family of your own. Making contingency plans is part of this.
As a first thought, life insurance often comes to mind for many people. You worry about how your loved ones will be cared for after your death. When you consider that 70% of working Americans would have trouble making ends meet in a month without a paycheck, you can see why this is the case. Any loss of income can have a significant impact on a family, but when the main breadwinner is no longer able to work, the effects can be catastrophic.
The truth is that disability insurance is as important a part of your financial plan as life insurance. However, one should not be used in place of the other. There is greater financial security for you and your loved ones when you have both life and disability insurance.
