Like many people, you may try to stay healthy by exercising regularly, following a good diet and avoiding dangerous activities. But as we all know, life is unpredictable, and despite your best efforts, you may encounter an injury or illness that can leave you unable to work for several months — or longer. If this happened, would you have difficulty paying your bills? Or would you be forced to dip into investments meant to help you achieve long-term goals, such as a comfortable retirement?
To help prevent these outcomes, you may want to protect yourself against the possibility of a disability. One good move is to build an emergency fund containing up to six months’ worth of living expenses, with the money kept in a liquid account. Even if you never need this fund for a disability, it’s hardly a wasted effort, because you could use the funds for other unexpected costs, such as a major repair to your home or car.
But to feel truly prepared for a disability that could threaten your financial situation, you may also need to consider disability insurance. If you work for a mid-size or large company, your employer may offer group coverage as an employee benefit. This coverage can be valuable, but it may not be sufficient. For one thing, many employer-sponsored disability policies won’t fully replace your lost income. Also, some group policies may make you wait longer than you’d like before your benefits kick in. And these policies aren’t always “portable,” either — if you leave your job, you might also be leaving behind your disability plan.
