There’s no doubt about it; both disability and life insurance are crucial things to consider for your future. However, it is recommended for consumers to weight out the difference to see if they want to purchase just one or both of these types of insurance plans. Here are some of the key differences between these two that can provide you with a better understanding of your options.
Difference Between Life and Disability Insurance
Both insurance plans take care of very different things but provide you with the same end-goal, and that is to take care of yourself and your loved ones. Life insurance, on the one hand, makes sure that your family is taken care of after your passing why disability allows you to keep taking care of your family while you’re alive.
What is Life Insurance?
Life insurance is quite simple. A person pays an insurance company a certain amount of money each month until they either terminate the contract or pass away. If the policyholder passes away during the contract, then those relatives such as children or spouses receive a tax-free lump sum. That money goes on to help spouses pay for funeral expenses, bills, and just overall necessities. Children might use it to pay for college or even purchase a home of their own in some cases. You can now see why so many opt-in to buy a life insurance plan.
What is Disability Insurance?
What are a few words that you think about when you hear the word insurance? The words protection and replacement are usually the first things that pop into most people’s minds. In terms of disability insurance, this is what it accomplishes. Disability insurance is a protective measure if you either become ill or simply unable to work due to an injury. The plan then kicks in and replaces the majority of your income. The number may fluctuate depending on your terms, but they usually range between 60% and 80% of your original salary.
Although it can be expensive to purchase both types of insurance plans, you should not look at it in that way. These are investments in your life and your family. Therefore, it is recommended for individuals to attempt to purchase both types of insurance plans for their families.
As you can see from the information listed above, obtaining these forms of insurance plans are a must. It is paramount that you conduct further research as numbers and types of contracts vary from person to person.