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Should We Buy Disability Insurance While We Are Still in Debt?

2011 June 13

YES! Dave feels very strongly that everyone who is reliant upon their income for maintaining their lifestyle needs to have long-term disability insurance, regardless of where you are in your financial journey, whether you are married or single. Dave does not include disability insurance in the Baby Step process since each household has different situations to address. His advice is that if your loss of income due to a disability would cause financial hardship for your family, you need disability insurance. As you get out of debt, you are reducing the amount of insurance you need – that means your peak time for protection is when your family is in debt and less capable of maintaining their lifestyle if faced with the loss of an income. The establishment of an emergency fund equal to 3-6 months of your expenses is a protective measure to use for short-term risks, allowing you to concentrate your dollars on long-term plans that cover you for five years or longer to protect against bigger risks. Remember to always check with your employer for access to a group plan since these are often the most affordable options available.

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