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Long-term disability insurance can be valuable

Written by Diane Archer

Today, it is difficult if not impossible to find an affordable insurance policy that will cover your likely long-term care needs after you retire. But, most people do not realize that buying long-term disability insurance to offset loss of income in the event of an illness or injury, while you’re still working, can be valuable. The cost tends to be low and the benefits extremely helpful.

Long-term disability insurance compensates working people who become critically ill or are injured and unable to continue to work. People typically use the coverage for close to three years. There is usually a block of time before the coverage kicks in, an “elimination period,” that may be three to six months or even longer. In some cases, people’s sick days can cover that elimination period.

Only about one in five working people today have long-term disability insurance. Most employers do not offer it. And, most people don’t think they will need it. So, they choose not to buy it, even though it costs about $22 a month on average. And, it can replace a good portion of people’s lost income.

People assume that they will not become disabled and unable to work. And, while the likelihood is not great that any individual working person will have a long- term disability, if you do become injured or seriously in, long-term disability insurance could cover 50-60 percent of your salary, according to Kaiser Health News.

The Social Security Administration predicts that one in four people who are 20 today will become disabled by the time they are 67.

If you buy long-term disability insurance yourself, with after tax income, and you receive long-term disability benefits, you will not pay taxes on the benefits. That said, if you decide to buy insurance, check out the policy carefully–what it pays, for how long, and under what circumstances, with what exclusions.

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