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Ask Farnoosh: Should You Buy Disability Insurance?

Mark asks: Is it wise for physicians to get disability insurance? If so, what kind and how much?

It’s smart for all workers to have some sort of disability insurance, especially physicians. 
According to the Bureau of Labor Statistics, two-thirds of private sector workers have no disability plans. And according to the Social Security Administration, 25% of today’s 20-year-olds will experience a disability before turning 67.

Disability coverage can come to the rescue if you’re unable to work because of an injury or illness by providing you with a portion of your income to help cover the bills while you recover.  How much does it cost? While many employees can access disability coverage through a group plan at work, individual policies can run anywhere from 1% to 3% of income, according to Laura Adams, senior insurance analyst at InsuranceQuotes.com.  “A male worker earning $100,000…might pay $1,000 to $3,000 per year for an individual disability policy,” she says. The typical amount of disability coverage, she recommends, is 60% to 80% of your annual income.

Disability insurance would be especially critical for a physician should he or she be unable to work for an extended period of time. “Given their many years of medical training earning very little income, [physicians] get a late start on retirement saving, which is even further hampered by their substantial educational debt loads,” says J. Christopher Burke, president of AMA Insurance.  “Any disruption to their income in the event of disability would put them even further behind.”

When purchasing an individual disability insurance plan, Burke recommends a policy that recognizes some of the special risks related to the physician’s job and one that covers roughly two-thirds of income. He also stresses getting an “own-occupation” or “own specialty” policy as opposed to a policy that states “any occupation.”  This way, you only need to prove you cannot perform a doctor’s job, as opposed to any job, to receive the insurance.

Esther Pretorius asks: What are the best ways to save when planning an engagement party?

Your question reminds me of that hilarious scene in “Bridesmaids” when Kristen Wiig’s character attends her best friend’s engagement party at the lavish country club, only to be greeted by a fellow bridesmaid wearing a massive ball gown. Can we say over the top? But having been to a few engagement parties in the past couple of years, I can tell you that you definitely do not need to spend oodles of money to stylishly and thoughtfully celebrate the newly engaged couple. Here are some top savings tips.

Set a budget. You could easily spend thousands of dollars if you don’t set a limit and understand expectations. “Take an inventory of what you, your family and in-laws and the party host may already have at home and then go from there,” says event planner Mindy Weiss.

Keep it intimate. The bride and groom may be planning to invite 300 guests to their wedding but that doesn’t mean you have to do the same for the engagement party. Limit the event to close family and local friends.

Host at home. Along the lines of keeping it intimate, see if a relative or close friend can offer his or her home as a gathering place. Otherwise, the cost of renting a space or restaurant could easily run you in the thousands.

Schedule for savings. Depending on the time of day you schedule the event, you could save on catering, as well. The least expensive route may be a simple brunch that includes bagels, various spreads, fruit and dessert. Ask guests to bring a favorite dish, as well. Since brunch is also the middle of the day, you could probably get away with just one specialty cocktail and wine (bought in bulk at Costco!) for adult beverage offerings, as people tend to drink more heavily in the evenings.

DIY the décor. Fresh flowers are nice, but an unnecessary expense. Think of what may already be available that could bring a more personal touch. “Cute centerpieces for the tables are pictures of the couple throughout their relationship,” says Weiss. Ask guests to arrive a bit early and decorate the place with their framed photos they have, something, in fact, my maid of honor orchestrated for my wedding shower.

Online invitations. While brides and grooms may want to stick with traditional paper invitations for the actual wedding, all the ancillary parties, from the engagement party to the bridal shower can be announced just as tastefully with email using invitation sites like PaperlessPost and PunchBowl.com. Many invitations on these sites are free.

Got a question for Farnoosh? You can reach her on Twitter @Farnoosh or email her at farnooshfinfit@yahoo.com.

Got 10 minutes? Want to earn chance to win cash? Farnoosh is conducting a survey for an upcoming book on money and relationships. At the end of the survey, learn how to qualify for a $100 American Express gift card giveaway. There's one each week for the next several weeks.

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