You’ve made your way through LSATs and long nights of studying at law school to finally pass the bar exam and become a fully-fledged lawyer. Whether you spend your days fighting for justice for your clients in the courtroom or putting together corporate contracts for some of the world’s biggest organizations, all of that time and money that you spent in getting to this point was absolutely worth it.
When you work in a prestigious field alongside other legal experts, it’s likely that you’re being well-compensated for the hours you’re putting in and the knowledge you’ve built over the years. So what happens when that all comes under threat thanks to a serious illness or unexpected injury?
No one wants to think about the possibility of their life being turned upside down by a health or wellness issue, but one in four of us will have to face that reality. Putting plans in place as early as possible to sustain your hard-earned income could make the difference between maintaining your current lifestyle and scrambling to find ways to support yourself.
That’s where disability insurance comes in. We’ll run you through why disability insurance for lawyers is so important, what you can expect from a long term disability policy, and how much you can expect to pay for coverage.
After all those years of studying to become a lawyer, you’re finally earning a good salary—even when you’re fresh out of law school. But you’re also saddled with a significant amount of student loan debt. We probably don’t need to remind you that newly-qualified attorneys have an average education debt of around $150,000. That takes around 18 years to pay off.
In most cases, living the life you’ve always dreamed of will be entirely possible on the income that you have as a highly skilled lawyer. But when life is full of unexpected twists and turns, you could soon find yourself in a position where you’re unable to work, jeopardizing your current and future security. After all, those loans don’t simply disappear if you stop earning money, neither do the bills pay themselves.
Ask any disability insurance attorney and they’ll tell you any number of stories about working professionals who lost everything thanks to an unanticipated health condition. Throw in thousands of dollars worth of medical bills on top of your day-to-day living expenses and you could soon find yourself in a hole that only seems to be getting deeper.
Having disability insurance is an affordable safety net to keep that hole as small as possible. You’ll pay a monthly, quarterly, or annual premium to stay covered for the length of your policy and, if you ever find yourself in a position where you can’t work due to an illness or injury, you’ll be able to make a claim to receive a payout that can support your essential living expenses.
Everyday costs like your household bills, groceries, and yes, even paying your student loans, can all be taken care of with these funds. There are no questions asked about what you’re using it for (unlike specialized insurance policies like mortgage insurance) so you can feel peace of mind knowing that whatever comes up, you have money there to cover it.
We know it can be difficult to imagine life without your hard-earned salary, particularly if you’re young and healthy. You might feel invincible right now, but over one million Americans are one paycheck away from financial ruin. You don’t need to be one of them if you take the time to think about what you’ll need if the unexpected happens—and then start preparing as early as possible.
Even if disability law isn’t your practice area, there are plenty of disability insurance attorneys out there who can give you peer-to-peer advice on how to approach finding your own coverage. Before you dive into taking out a policy, there are a few key points you need to know.
The types of illnesses and injuries that your insurance policy covers can be different depending on the policy itself and the company you choose to work with. That’s why we like to refer to our policies as income insurance rather than disability insurance here at Asteya—because the meaning of “disability” can vary hugely from provider to provider.
Most policies will cover some standard medical conditions though, such as cancer, mental health issues, pregnancy, fractures and strains, and movement-limiting musculoskeletal disorders. Before you take out a policy, be sure to read the fine print to understand exactly what is covered and clarify any points of contention with the insurance provider before committing.
It’s important to remember that any pre-existing conditions that you had before the policy began likely won’t be covered. For example, any pregnancy-related costs or expenses typically won’t be covered if you were already pregnant before the start of the policy, even if other conditions are covered. Take this into consideration before making any plans to expand your family and look into alternative insurance options if necessary.
Do your research and review the key areas of the policy like the premium amount, the definition of disability, the benefit amount and period, and the waiting period.
While the actual amount you’ll be getting each month is obviously important to know, the waiting period is a crucial part that many people often overlook. This is the amount of time that you’ll need to wait between when your illness or injury occurs and when your payouts will begin.
The waiting period is why it’s necessary to have some of your own savings in place and not rely completely on your insurance policy. It could be several months from when your health or wellness issue starts to when you’ll be receiving any funds, so having a secondary source of income to pull from during that time is vital.
Generally speaking, you can expect your disability insurance to cover around 60% to 70% of your annual income. If your savings aren’t enough to make up the rest, you may need to consider finding work in a different field to supplement. Only certain types of insurance policies will allow you to do that, so keep that in mind as you research your options.
When you’re looking for disability insurance for lawyers, true own occupation insurance will likely be best. This type of policy means that you can still work—either as an attorney or in a completely different field—and earn an income but still receive your disability payouts from your policy.
Own occupation insurance is a little more costly than other policies, but it’s worth it to give you the maximum amount of income protection coverage. You won’t be required to work, but you also won’t be prevented from doing so if there’s something you’d like to do that fits around your current health circumstances.
What you pay each month or year for your insurance coverage is dependent on a number of different factors. But the good news is that, for most attorneys, you’ll be considered one of the least risky occupations and pay less for your policy as a result. On average, you should expect to pay around 1-4% of your annual income on your insurance policy.
If you’re young and healthy, now is the time to start looking into insurance. Unless you have some particularly dangerous hobbies that you’re participating in outside of your practice hours, most providers will see you as unlikely to make a claim and offer you a better price upfront. Not only can you benefit from those cost savings now, but this is also the time when your student loans are likely to be highest and your income and savings bucket the lowest, so it’s crucial to have a backup plan in place.
On top of your base plan costs, there are additional riders that you can add for an extra fee that may come in handy later on. Student loan protections can give you more in your monthly payout if you need to make a claim and will usually be sent directly to your loan company. That means that the payout money you receive directly can be used for essential costs, rather than hefty student loan payments.
You’ve worked so hard to build a high-earning, secure career for yourself and your dependents, so having a job-pausing health issue is the last thing you want to think about.
Protecting your future income when you have the means to do so is one of the smartest financial moves that you can make. It means you have one less stressor to worry about should you need an emergency safety net.
After all, as a lawyer, you know this much to be true: preparation is key.
Get in touch with Asteya today to begin your no-exam disability insurance application.