Do You Have Disability Insurance? Can You Afford Not to Have It?

By Melissa Batai

While working from home has some amazing perks such as a flexible schedule and the ability to care for your children, there are also some downsides, many of them financial.  For instance, if you previously worked for an employer, you likely had disability insurance.  

At my former place of employment, I was allowed to use my sick leave for the first 60 days. Then, after that, my disability pay (paid at 60% of my salary), would kick in.

Disability insurance is a wonderful perk, but you may wonder if you really need it.  Consider these points:

Do you have a spouse who also brings in an income?  If you're not relying on your income alone, you have more flexibility in deciding if you need disability insurance.

Does your spouse's income cover your monthly bills and savings goals?  If so, then disability insurance is not imperative.  However, if your family relies on your income to also meet your financial goals, you may want to consider it.  A good rule of thumb is that typical disability insurance gives you 60% of your regular pay.  If you bring in 40% or more of your family's income, you should have disability insurance.  If you bring in less than that, you may be able to tighten your budget should the unexpected happen.

How physical is your job?  If you're a freelance writer, for instance, you need use of your fingers and arms to type.  You also need your full mental capabilities.  If you lose these, you'll be unable to work until you're healed.  The more physical your job, the more likely you'll need disability insurance.

How big is your emergency fund?  If you have a very small emergency fund, you're in a precarious position financially and may want to get disability insurance.  If you have a six to twelve month emergency fund as well as investments, you may be able to tap those should you face a temporary injury.

Deciding whether or not you need disability insurance is never easy, especially since the premiums are usually quite costly.  Answering these questions can help you decide if it's a worthwhile investment for your family.

Do you have disability insurance for yourself?