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Insurance foolishness: Disability insurance

7 ways you're being foolish with insurance
Disability insurance © Rhonda R/Shutterstock.com

You can be a dolt when it comes to disability insurance or life insurance. Don't over-rely on the coverage you have through work.

"It could be catastrophic if you lose your job at the same time you become severely ill," says Tom Bigoski, owner of the Thomas Bigoski Insurance Agency in Gainesville, Va. "Sometimes life and disability insurance policies are portable from one job to the next, but often you have to convert to a more expensive policy. You may not be healthy enough to qualify for a new policy, either."

Bigoski also notes that employers can choose to take their policies away at any time because the group policy belongs to the employer, not the employees.

"You should always take any insurance policy that's free, but don't have more than 50 percent of your life and disability insurance through your work," he says.

Kevin Finneran, vice president of life product management at MetLife in Bloomfield, Conn., says employer-sponsored disability insurance often covers only your salary and not bonus or commission income, which means your benefits could be much lower than what you're actually bringing home.

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