Disability & Life Insurance

Life is unexpected. Death or disability can occur at any point in your life and leave you or your beneficiaries in financial turmoil. To help you plan for these unexpected events, life and disability insurance is available. Most insurance companies that offer one of these types of insurances also offers the other, because both death and disability are the leading causes of sudden, unexpected financial hardships in families, according to a New York Times article. Because insurance policy options are abundant, you should research your options before deciding on a plan.

Life Insurance Overview

• Life insurance is a contract between you and a life insurance company. You pay a monthly premium that begins when you start a life insurance plan, and that company pays a certain sum of money to your beneficiaries after you die, according to IllinoisMutual.com. The money can be used for immediate expenses, such as funeral arrangements or to pay off a mortgage, or it can be used for long-term expenses, such as for health benefits that your beneficiaries might lose with the loss of you, or to cover childcare costs in a single-family home.

Types of Life Insurance

• Two basic types of life insurance exist. Term life insurance is the first type, which you purchase for a specific length of time, such as five years or 20 years. At the end of the term, you can choose whether you want to renew the policy. This is the most affordable and easiest type of life insurance plan, and it pays a lump sum of money immediately after your death to your beneficiaries. Permanent life insurance is the other type, which continues for as long as you pay a monthly premium. Parts of your monthly premiums go into a tax-deferred investment account that creates extra cash value or interest.

Disability Insurance Overview

• Disability insurance is another type of independent insurance that people choose to purchase when their employers don't offer it as part of their benefits package. With disability insurance, you pay a monthly premium to a disability insurance company so that if you ever suffer from an illness or injury that doesn't allow you to work for an extended period of time, this company will pay you a sum of money to live off of during this time of unemployment. According to Metlife.com, disability insurance plans usually replace from 50 to 70 percent of a worker's gross income.

Types of Disability Insurance

• Numerous types of disability insurance plans exist, and companies help you choose a plan that is right for you and your circumstances. For example, if you work at a high-risk factory or chemical plant, you should put aside more money because the risk of becoming disabled is higher. You can choose between non-cancelable plans, with premiums never raised and benefits never reduced as long so premiums are paid on time, or renewable plans, which last only a specific amount of time but the premiums can be increased. Most plans end at a certain age, usually around 65. If you do not use your disability insurance by that age, you will receive your money at the time that your plan ends.

Life & Disability

• According to a New York Times article, most families decide to purchase a life insurance plan after marriage or with the birth of a child, but not all families purchase a disability plan, because they think they won't need it. Discussing insurance plans with a knowledgeable insurance company helps you decide what you need. When choosing a company to work with, you should research the premium rates and types of plans that companies have to offer. Once you choose a company, its staff will ask you a plethora of questions regarding your heath, job, family history and more, and together you will create a plan that works best for you.