Open Enrollment: Should You Buy Disability Insurance?
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Hey, your money briefing listeners, this is J.R. Whelan. Here at YMB, we're all about bringing you important personal finance and career news to help you make better decisions about your money. But we want to learn more about you. What kind of financial knowledge do you have, and where could you stand to learn more? If you're listening on Spotify, look for our poll under the episode description, or you can send us an email to ymb at wsj.com. That's Y-M-B dot com. at WSJ.com. Now on to the show. Here's your Money Briefing for Wednesday, November 8th. I'm J.R.
What is disability insurance and why should employees think about it during open enrollment?
Whelan for The Wall Street Journal. Toward the top of the list for people choosing next year's health benefits are medical and dental plans. But one area of coverage that's sometimes overlooked is disability insurance.
Disability insurance is definitely worst case scenario planning. You are planning for the possibility that you will become disabled either due to an illness or an injury or something else. And you'll be unable to work for a period of time and you'll need your income replaced.
We'll talk to Wall Street Journal personal finance reporter Julia Carpenter after the break.
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How much does a typical employer-provided disability insurance policy cost?
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When is disability insurance considered essential versus optional for workers?
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Workers signing up for company-provided health benefits this month will have the option of selecting disability insurance, but it often involves layers of confusing details that might drive people away.
Why are more employers including disability coverage in benefits packages now?
Wall Street Journal personal finance reporter Julia Carpenter joins me. So, Julia, what does a typical disability insurance policy cost?
A typical insurance policy costs somewhere between 1% to 3% of your income. So if you're seeing quotes for 4%, 5% or higher, that's likely not a good deal in the world of this coverage.
For a lot of people, it makes sense to select things like medical coverage to cover doctor visits and prescriptions. But why would someone consider disability insurance?
How does long-term disability insurance work with public disability benefits to protect your income?
Disability insurance is definitely worst case scenario planning. You are planning for the possibility that you will become disabled either due to an illness or an injury or something else, and you'll be unable to work for a period of time and you'll need your income replaced. I spoke with one expert who said that to him, long-term disability insurance is just as essential as health insurance. He has seen too many people fall ill and they need that income in order to continue living the life they lead. I spoke with one consultant and he said, listen, everyone needs long term disability insurance unless you are incredibly wealthy in your own right and not worried at all about funding anything that could happen in the future.
Most people aren't in that position. So they should consider that, especially as they are nearing any sort of health concern or if they work in a particular industry that is maybe they've seen other coworkers fall prey to some of this stuff. But it's also something that people should consider if they are looking to get pregnant in the coming year and might want to take their maternity benefits as a result, or people who see that the policy is somewhere, again, between that 1% and 3%, because in that case, it's just as affordable as dental insurance.
Can short-term disability cover maternity leave and how do policies treat pregnancy?
Why are more companies offering disability insurance as part of the benefit options?
Several states, including New York, California, Rhode Island, and others, actually legally require companies to offer short-term disability insurance to their employees.
If somebody is injured or disabled and they have to leave work for months at a time, now all of a sudden their income is turned off.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:01–1:03
2
What is disability insurance and why should employees think about it during open enrollment?
1:03–1:42
3
How much does a typical employer-provided disability insurance policy cost?
1:42–1:48
4
When is disability insurance considered essential versus optional for workers?
1:48–2:27
5
Why are more employers including disability coverage in benefits packages now?
2:27–2:56
6
How does long-term disability insurance work with public disability benefits to protect your income?
2:56–4:05
7
Can short-term disability cover maternity leave and how do policies treat pregnancy?
4:05–5:30
8
What specific questions should you ask your benefits staff before enrolling in disability insurance?
5:30–7:40
Speakers
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