Step 61: Disability Insurance

Step 61 of the 100 Steps to Financial Independence: Disability Insurance
Step 61 of the 100 Steps: Disability Insurance

A disability insurance provides you with financial compensation in the event of a disability that stops you from going back to work. It covers your future wage by paying a certain percentage of your wage, often around 60-70%,  either until you are able to go back to work again or for as long as the policy contracted states that you are entitled to the compensation.

There could be several reasons for somebody being unable to work, including illness, medical conditions or after an accident. The difference with a medical insurance is that the latter only covers your medical bills, not the fact that you no longer have an income to support you financially. In some cases and countries social security might offer a disability coverage, but conditions vary greatly and it might not kick in until after a certain time, sometimes not even til after a year.

Do you need disability insurance?

The chances of becoming disabled before retirement age can be 2 – 3 times higher than the odds of dying before retirement age so there is a relatively big chance you might become disabled at some point. Due to this high chance, disability insurance tends to be fairly expensive. There are several situations in which you might not need disability insurance, including: Continue reading

Step 31: Understand you will never have enough money

Step 31 of the 100 steps mission to financial independence: Understand you will never have enough money
Step 31: Understand you will never have enough money

No matter at what stage in your life you are, you probably feel that you don’t have enough money to live the lifestyle you truly aspire, let alone to behave (even more) sensibly with your money. When planning out, or even just thinking about, putting money aside to save, invest or pay off a debt, it is tempting to justify holding off making that sacrifice until you…. (insert excuse here).

Until you earn more? Until you’ve finished your post-grad course? Until you are married? Until you have bought a house?  Until your children are independent? You can come up with a billion reasons here, many of them probably valid in their own way, so let’s look at some of the most common excuses, so you can appreciate that with every change in your life, your spending patterns will most likely also change.

There are two main reasons why this thinking pattern of “I will start saving when…” never really works: Continue reading