Disability Insurance

Bobo Team • All you need to know • 3 min read • Written by Sean Mikucki, Financial Advisor

For new parents, adapting to the added responsibilities and financial considerations of raising a child is a significant life change. Among these considerations, protecting your income with disability insurance is a critical but often overlooked aspect. Here's why disability insurance is important for new parents and advice on how to approach it:

Why Disability Insurance is Important for New Parents:

Income Protection: The primary purpose of disability insurance is to protect your income if you become unable to work due to illness or injury. This is crucial for maintaining your family's lifestyle and ensuring that your financial obligations, such as housing, utilities, and childcare, are met even if you can't earn an income.
Covering Increased Expenses: Raising a child comes with increased expenses. If an injury or illness were to disrupt your income without the safety net of disability insurance, the financial impact could be severe.
Peace of Mind: Knowing that you have disability insurance provides peace of mind. You can focus on your family and recovery, if needed, without the added stress of financial instability.
Statistical Likelihood: Statistically, individuals are more likely to experience a temporary or permanent disability during their working years than they are to die. Despite this, disability insurance is often overlooked in favor of life insurance.
Employer Coverage May Not Be Enough: While some employers offer short-term disability insurance, the benefits may not cover all your expenses or last long enough. Understanding the coverage provided by your employer and supplementing it with a private policy if necessary can ensure adequate protection.

Advice on Choosing Disability Insurance:

Assess Your Needs: Evaluate your financial obligations, including day-to-day living expenses, debts, and future financial goals. This assessment will help determine the amount of coverage you need.
Understand the Types of Coverage: Familiarize yourself with short-term and long-term disability insurance policies. Short-term policies typically cover you for a few months, while long-term policies can provide benefits until retirement age, depending on the policy terms.
Look for Non-Cancellable and Guaranteed Renewable Policies: These policies ensure that your coverage cannot be canceled as long as you pay the premiums, and the terms of your policy, including your premium rates, cannot be changed by the insurer.
Consider the Waiting Period: The waiting period, or elimination period, is the time between when a disability begins and when benefits start. Choosing a longer waiting period can lower your premiums, but you should ensure you have enough savings to cover expenses during this time.
Review the Definition of Disability: Policies can vary in how they define "disability." Some cover you if you're unable to perform your specific job, while others only pay out if you're unable to do any job. Choose a policy that matches your needs and understanding of risk.
Shop Around: Compare policies from multiple insurers to find the best coverage and rates. Consider working with an independent insurance agent who can provide options from various companies.
Review and Update Your Policy: As your financial situation and family obligations change, review your policy regularly to ensure it still meets your needs. You may need to increase your coverage as your income grows or your family expands.

For new parents, securing disability insurance is a proactive step to safeguard your family's financial future. It ensures that, even in the face of unexpected health issues, you can continue to provide for your family and meet your financial obligations.

This information is provided for entertainment purposes only. We do not accept any responsibility for any liability, loss or risk, personal or otherwise, incurred as a consequence, directly or indirectly, from any information or advice contained here.

Want to know more?

DOWNLOAD THE APP