First of all, if you are reading this article because you are a young professional in the market for Disability insurance, Congratulations! You are taking a step that many people do not take until it is already too late. Disability insurance protects the most valuable financial asset we have - the ability to earn an income.
Purchasing a quality Disability insurance policy while you are young is one of the hardest yet smartest financial decisions you will ever make. Think about all of the goals, hopes and dreams you have. Aside from finding a life partner and perhaps starting a family, they will all most likely rely on one very important thing - money. We all know that money does not grow on trees and so the only way to have it, is to work hard and earn it. Being able to work and earn an income is our greatest financial asset. It allows us to accomplish all of the goals, hopes and dreams we have. But what happens when an unexpected injury or sickness prevents you from earning an income. A total disability is equivalent to an economic death, but even a partial disability can cause a severe financial struggle. Disability insurance is a product created to solve this exact uncertainty. If due to an injury or sickness you are unable to perform your occupation and earn an income, this coverage can supplement up to 60% of your income on a tax-free basis while you are disabled. As a young professional it is important to obtain a quality policy that protects the life style you have today but also the life style you will have tomorrow.
One of the initial things you should consider is how much coverage to begin with. As a young professional, you are probably earning less money now than you will ever earn again. Additionally, the life style you maintain is probably fairly simple and less expensive than it will be in the future. Aside from outstanding loans, debts and regular living expenses, you hopefully do not have very many financial responsibilities at this time. Nonetheless, it is important not to spend all of your money on insurance premiums either. In order to help keep the premiums on your policy reasonably priced, you should obtain a little over the minimum amount of money you need to satisfy your current monthly expenses. This will allow you to sustain your current lifestyle, in the case of a disability, without being a financial burden to someone else.
There are a few contractual features I suggest you seriously consider when designing your policy. For starters, you want your coverage to be non-cancelable, which means that regardless of all circumstances, as long as you pay premiums on time the insurance company cannot cancel your policy, change its premiums, or modify any provisions until you reach age 65. Most likely you will have this insurance policy for the next 30 or 40 years of your life, and although it is unlikely for an insurance company to actually change anything, a guarantee is much more preferable. Having a Disability policy that is cancelable is equivalent to accepting a promise from someone who maintains the rights to change the promise - your income is far too important to take that risk.