7 things to do before buying disability insurance

Post date: Aug 29, 2016 12:31:44 PM

Throughout your working lifetime, you are three times more likely to become disabled than you are to die before age 65. Makes a convincing case for having disability insurance, right? Why then is it that people have historically been more likely to buy life insurance, not disability insurance?

The answer is simple: People are confused by disability insurance. There are so many terms to wrestle with that people just throw up their hands and say, "I give up. I'm not buying!"

If that sounds like you, read this primer to get up to speed and plot your next move if you're looking at buying disability insurance.

Know your PDQ

You can visit WhatsMyPDQ.org to assess your "personal disability quotient" (PDQ). This a free service of the Council of Disability Insurance. Your PDQ will predict the likelihood of you needing to use disability insurance during your working lifetime.

Decide if you should buy your own policy or get it through work

Look at both independent policies and the one offered at work. Independent policies are portable from job to job. The policy offered at work may be partially subsidized by your employer and come at a better rate. 

Too often people will skip buying disability insurance and think that Social Security disability will help them if needed. Social Security disability won't help. It doesn't pay a big benefit and it's much more difficult to qualify for than a group or individual policy.

Do your background research

Whenever you're considering buying disability insurance, it's good to do some background reading on this kind of policy. The Wall Street Journal recommends sites like PolicyGenius, Disability Insurance Resource Center and Disability Insurance Quotes as good unbiased sources of info. You can get a quote through these sites too.

Find an insurance agent

Whether you use the sites mentioned previously for a quote or you decide to look elsewhere, one this is certain: You've got to get more than one quote. Find an insurance agent, preferably one who can give you quotes from multiple providers. Disability Insurance Services is a good starting point to find a broker or you can always call an insurer and ask for a local broker.

Make sure your policy covers your specialty

Whether you're a physical therapist or a construction worker, be sure that the policy your eyeing covers your skill -- in case you are unable to perform your specific job duties.

Buy at 60% of your current pay

Get a disability policy that begins making payments three or six months after you are disabled and continues until age 65. Buy coverage that's equal to 60% of your current pay before taxes because that will approximate what you're taking home after taxes. 

Be sure the insurer is strong

You only want to consider companies that have been rated "A++" by A.M. Best, which means they are of the highest financial strength.


Disability insurance is an often overlooked part of your financial plan. To discuss this and other topics regarding financial planning, insurance planning, investment planning, income tax planning, retirement planning, estate planning and your 10 Steps to Financial Freedom, contact A.D. Financial Planning.