Life insurance and disability coverage aren’t the most exciting topics, but they’re among the most important protections you can have. If something unexpected happens, these benefits can be the difference between financial stability and financial hardship for you and your family.
Many employers provide a basic life insurance policy at no cost to you, often equal to one or two times your annual salary. While this is a great starting point, financial experts generally recommend having coverage equal to 7 to 10 times your annual income, especially if you have dependents, a mortgage, or other significant financial obligations. If your employer-provided coverage isn’t enough, you may be able to purchase supplemental life insurance through your company’s benefits program, often at group rates that are lower than what you’d find on the open market.
Disability insurance replaces a portion of your income if you’re unable to work due to illness or injury. Short-term disability typically covers you for a few weeks to several months, while long-term disability kicks in after that and can last for years or until retirement age, depending on your policy.
Many employers provide short-term disability at no cost, but long-term disability often requires you to opt in and pay a premium. Consider what would happen to your finances if you couldn’t work for six months or longer. If the answer is concerning, long-term disability coverage is worth the investment.
Review your current coverage annually, especially after major life events like getting married, buying a home, or having a child. These milestones often change how much coverage you need.
It’s natural to avoid thinking about worst-case scenarios. But having adequate coverage in place is one of the most caring things you can do for the people who depend on you.