Is Residual Disability Insurance Enough?

Approximately 20% of Americans are living with some form of disability, and that can mean being unable to work, and dealing with a lot of financial strain. But if you can no longer work due to a disability, and you have disability insurance benefits through your job, you might get some financial help, depending on your policy’s definition of disability. And if you can return to work part-time, you can still receive partial disability, or residual disability benefits – this is great, but is it enough? And if your job doesn’t offer insurance with residual disability benefits, should you buy it on your own, or should you consider purchasing a life insurance policy with disability riders?

Definition of Disability

black and white picture of handicap sign
Life insurance companies have different classifications of who can receive what benefits for how long.

When it comes to receiving disability insurance benefits, it all depends on your insurance policy’s definition of disability: the definition of disability can differ between different insurance companies. Their different classifications of who can receive what benefits for how long  include:

  • Total disability– You are completely disabled and you can’t work, and can receive your insurance benefits because you have lost your income source. 
  • Partial disability– You can still work, but perhaps only part-time or on reduced duties, so you have lost part of your income. In most cases, you will still be able to receive benefits.
  • Extended partial disability– When your partial disability benefits run out, you might be eligible for extended partial disability, which is essentially the same as partial disability, but lasts for as long as you need with reduced benefit amounts. 
  • Presumptive total disability– This is a form of total disability, meaning you will never recover from your disability due to loss of limbs, deafness, etc.  There is no elimination period. 

What Are Residual Disability Benefits & How Do They Work?

As mentioned above, when you are facing partial disability, meaning you can perform some of your duties at work part-time, you will receive residual disability benefits. Typically, you will get full disability benefits that last for 6 months and will then be reduced to a percentage of your monthly income, which will be based on how much income you have lost. Depending on your insurance company, though, a life insurance policy with a residual disability benefit rider could cover more.

Life Insurance Disability Benefits

So the question is: would the residual disability benefits on a disability insurance policy be enough for you or should you invest in a life insurance policy and add disability riders? Life insurance can be very affordable, and will be active for the rest of your life, not only while you are working, and can provide you with help if you become disabled. It will also leave your family with benefits in the event of your passing.illustration of a hand picking a coin from a plant with 2 others next to it

There are multiple long-term disability insurance riders available to add on to your life insurance policy, and many of them are free! In fact, this type of rider usually comes standard on a policy or can be added at no extra cost. Some different riders to consider include:

  • Waiver of premium– If you become totally disabled, and can no longer work or pay for your life insurance, this rider will cover your premiums until you’re no longer disabled, or until you reach a certain age, typically between 65 and 70.
  • Disability income rider- This type of rider provides monthly income payments if you are permanently disabled. Payouts are typically a percentage of the policy’s total coverage amount.
  • Long-term care rider– The money from this rider can help with living expenses if you have a chronic illness and are unable to complete daily tasks on your own.
  • Accelerated death benefit rider– You can get part or all of your policy’s death benefit while you’re still alive if you have a terminal illness. There are no restrictions on how the money can be used, which is great because you can use it to pay for medical care and treatments.

If you want extra protection, you can always have both disability and life insurance if you can afford it. If you cannot, though, consider looking more into life insurance and speaking with a licensed agent who can help identify which life insurance policy will suit you best, as well as which rider would be best in case of disability. Each company offers different rates and policies, which is why it is important to compare all of them. 

Want More Information?

Before purchasing a life insurance policy, you should consider any additional riders you want to add on: riders are a great way to add coverage for unforeseen circumstances. If you need help finding a policy, or with reviewing your current policy, it’s in your best interest to speak to a local agent, who will help you compare plans and see which is the right fit for you. Consider also using online tools to see what is available. To get you started, we have provided the top insurance companies that offer life insurance policies below; each can give you hassle-free assistance and the most competitive rates in the nation. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.

Before Getting Married, Discuss Finances & Life Insurance!

Congrats on your engagement! You’re probably busy planning and making arrangements for the big day, but during this fun (and stressful!) time, don’t forget that there is something very important you need to discuss before getting married and sharing your life together: finances. Before making the commitment to forever, you should be clear about what debts and assets you have; once you’ve done this, there’s one more very important thing to talk about, and that’s life insurance. We get it, it’s not the most romantic subject to talk about before tying the knot, but you definitely need to discuss how much life insurance you’ll need to ensure your family’s future financial stability. To make things easier, consider the following so you can figure out what kind of life insurance you’ll both need.

Debts You’re Bringing To The Marriage

illustration of a woman holding a large bag with a money symbol on her shoulders
Before getting married, it is important to discuss any debts, and other finances you have with your fiancé.

You’d probably agree that being open and honest with your partner is very important, right? Well, that includes being open with your soon-to-be spouse about any key financial information; in fact, roughly 42% of couples say transparency about finances is key to a healthy relationship. This is especially true when it comes to any debts that you will be bringing into the marriage, including credit card debt, student loans, or car payments. 

If you both have an understanding of what debt you’ll be taking on before getting into the marriage, you’ll be better equipped to come up with a plan to tackle that debt; you’ll also know how much life insurance coverage you’ll both need to keep you financially protected in the future. Remember, if one of you were to pass away, the other could be responsible for some of those debts, so take them into consideration when choosing your policy. You will want to make sure that in the event of your passing, you can still help cover these debts and provide enough for other expenses. 

Are You Planning On Having Children?

Do you want to have children someday? Does your partner? If the answer is yes, a lot of other questions will follow, like: Will you be buying a house one day as your family grows? Would you be able to continue taking care of your children on your own if your spouse passed away? Do you plan on helping your children with college expenses? You will need to discuss these questions and figure out how much life insurance coverage will be enough to cover any or all of the scenarios raised above. 

Evaluate Your Disability Insurance

blue and white disability sign
If your job does not cover disability in case you get injured and unable to work, you can get a disability rider with life insurance.

In the event that you or your spouse got hurt or disabled, would the disability insurance offered through your job cover your bills? Odds are it would not; in fact, more than half of working Americans could barely afford their bills past the first month of being unable to work. You will both want to be financially protected if the unexpected happens and you are no longer able to provide an income; life insurance disability riders can help you or your spouse keep paying the bills by covering any lost income. 

What Kind Of Life Insurance Policy Should You Get?

You have options when choosing a life insurance policy/policies to cover your new family. One thing to consider is whether you plan on having your own life insurance policies or a joint life insurance policy; joint life insurance policies cover both of you, and are generally less expensive than purchasing two policies. If you decide on a joint policy, you have two options: a first-to-die policy, which provides benefits to your spouse after one of you dies, and a second-to-die policy, which pays out benefits to your family after you both have passed. Be aware that after the first-to-die policy’s benefits are paid out, the policy terminates, meaning the surviving spouse would have to get additional coverage if they want to provide benefits for the rest of your family after they pass. 

Individual life insurance policies might be a better fit if you want guaranteed protection for each individual; you might also be able to get higher payout benefits when getting your own life insurance policies. The best way to determine which is the best route is to go over your finances and compare plans. You might find that a term life policy is better for your needs, while your spouse might decide on a permanent life policy. Whatever you both choose, it is important to have life insurance for the unexpected, so that neither of you is left struggling.

Talking about your finances before getting married might not seem fun when you are in love and enjoying the good times, but it is necessary, and avoiding the subject will be detrimental to your relationship in the long run. You need to know how much debt you each have and what your future plans are for taking on more debt, so you can figure out exactly how much life insurance coverage you’ll need to protect your family now and in the future. After having the talk, the next step is determining which life insurance policy will best fit your finances and needs; the best way to do this is by working with an agent who specializes in life insurance. We have provided the top life insurance companies in the nation below; each offers hassle-free assistance and the most competitive rates. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.