Oh sure, we’ve read plenty of articles about the importance of disability insurance. Some of us have it, some of us don’t, and some of us have looked into it only to discover it’s dang near impossible to get.
I have a policy with Combined Insurance. It’s kinda like AFLAC — just a small policy designed to help out if something goes wrong. Not really intended to save your neck financially if you break your neck physically. It’s an easy policy to sign up for and it’s less expensive than many of us pay for a month of lattés or cigarettes.
Now that I have a busted hand, mounting medical bills, and have just cancelled another week of appointments, I am glad I have it. It won’t come anywhere near covering my costs. And no, this grasshopper does not have her three (or even one) months’ worth of expenses in savings, nor do I have my health insurance deductible nested away in that tax-deductible HSA I’m always meaning to actually contribute to. These things would make facing a four- to eight-week hiatus much easier. But I’m fortunate, I could be facing much worse.
But I wanted to rant about the truth behind getting disability insurance. I actually went on quite the mission to get some of this stuff last year, and let me tell you what no one mentions when they write articles on the subject.
First, many insurance companies have minimum income requirements. They are all going to require you to prove your income. This is another reason to not cheat on your income taxes — because if you’re self-employed, that’s what they require to determine your income.
That may be all fine and dandy, but several statistics companies list the average income for a manicurist at about $18,000 a year — I ran into a lot of companies that required a $22K-$25K income to qualify for a policy.
Disability policies — much like state unemployment — only pay you a percentage of that income. And despite standard percentages that are often listed at 60%, I found that’s not necessarily a number you can expect. So it’s worth shopping around.
But the scary thing about disability insurance is that it only pays a percentage of your personal adjusted gross income ... that’s the part after you’ve written off all your deductions. What I really want — what I bet most of us really want — is to insure our gross receipts. Because most disabilities aren’t long term, and we want (need) to ensure that we still have businesses to return to. It’ll be hard enough to fill our books again if we’re out for six to eight weeks ... we have to keep the rent paid in the meantime. But disability insurance doesn’t cover that.
You know you’re officially a grown up when you start buying insurance that isn’t required by law. I’m on the hunt for a "business owner’s expense" policy, and watching the aftermath of Hurricane Sandy, I think I’ll spring for a "business interruption" policy too.
And I’ll start working on that savings account too.
