Financial Planning for Generation X & Y Women
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Expert Q&A Archive

Can a stay-at-home mom get disability insurance?
Can a stay-at-home mom get disability insurance?
Jennifer Lane:
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Unfortunately not. Disability insurance covers cash income (salary), where there is no salary there is no possibility of coverage.
Thelma L. Moultrie:
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A stay at home mom can get disability insurance if she has a business that generates income. Disability insurance is insurance designed to replace income in the event you are not able to perform job that has been paying an income. If a stay at home mom takes care of her family; she should consider Long term care insurance. Long Term care insurance is designed to pay a daily benefit if an individual cannot perform at least 2 of the six ADL (activities of daily living). Long-term care encompasses services provided to individuals suffering from a chronic illness, disabling condition or cognitive impairment. These services are generally needed for an extended period of time and may not "cure" or "heal" the patient. They focus on helping the individual with routine activities (ADL's) such as bathing, dressing, eating, transferring from bed to chair,using the toilet, and continence ( the ability to control one's bowel and bladder).
Alyssa Rakovich:
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Disability insurance insures your income. If you do not make an income, you cannot buy income protection insurance. Most individual policies are designed to replace your “take-home” pay or about 60% of the actual income you make. That’s because you do not pay taxes on the benefits paid out by a disability policy as long as you have not written off the premium on your tax return and as long as your employer has not paid for it. If the employer does pay for your disability insurance, any benefits you receive from it are taxable which means that if the policy pays only 60% of your gross income, you're going to come up short. Be certain you know what you are paying for. This is a link to soc sec regarding disability by soc sec. - Features to pay attention to very carefully: Disability policies vary greatly, due to the many variables built into them. One of the most important is the policy’s definition of disability. Some policies pay only if you can’t work in any gainful occupation (aka “any occupation”.) The policy you own should pay benefits if you cannot perform in your specific occupation (aka “own occupation”). Most group policies [those provided by employers] are usually “any occupation”. This is essential. Think for example of a brain surgeon who loses a finger or two – can he still work? Yes, but can he still work at his own occupation? Probably not?
You should also pay close attention to the policy’s waiting period (aka elimination period). This is the period of time you must wait after suffering a disability before your benefits kick in. It can be 30, 60 or 90 days, 6 months or even a year. Naturally, the longer the wait the less the premium will be. You need enough cash to cover your living expenses during that time period. How long can you live off of your savings? According to the Housing & Home Finance Agency of the U. S. Government, 48% of home mortgages in default are due to the disability of the homeowner.
Is your disability policy portable? If you have your disability policy through work, what happens if you quit?
Is your policy non-cancelable and guaranteed renewable?
The policy should have inflation protection? What is the Cost of Living Adjustment on your policy? (COLA)
The benefit period refers to the period of time that the policy will pay benefits. Some policies pay benefits for a specific number of years. The most desirable is a policy that offers a lifetime benefit if the disability was caused by an accident, and to age 65 for a disability caused by illness. Again, the longer the benefit period the higher the premium. Partial or residual disability benefits refer to the benefits paid when your earnings decrease by a certain percentage due to a disability. Policies with this provision will provide for percentage of the disability benefits when you are able to perform, some, but not all of the functions of the your occupation i.e. the brain surgeon turned professor. Please take the time to carefully read the language and provisions contained in your policy. Ask for help from a knowledgeable professional.
E. Kim Dignum, CFP:
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There is great value in a stay-at-home mom, however, there isn’t any income to protect, nor insure.
Barbara Franklin:
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NO - disability insurance is meant to replace income - requires documentation of salary!
Susan Saleem:
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Disability Insurance usually pays benefits based on a percentage of your income so I would assume a stay at home Mom would not qualify.
Connie K. Marmet:
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It would depend on prior employment status and when and how the disability originated.
Randi Grant:
Elizabeth Goldsmith:
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Yes, definitely.
Delores Lenzy - Jones, CPA, CIA:
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Yes, a stay-at-home mom can receive disability insurance. Unfortunately, because there are not a large number of individuals to spread the costs across the premiums can be cost prohibitive.