Finding financial relief
There are several types of income-replacement insurance available to help you offset a loss of income while you're unable to work.
Government disability insurance programs
Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) can help ease the burden of a longer-term disability, but they may not be enough on their own. The average SSDI benefit awarded is about $1,800 a month, or roughly $21,600 a year.1 To qualify, you must meet eligibility requirements and be unable to work for a year or more. Decisions typically take three to five months,2 so these programs may not help with short-term disabilities.
Disability and income replacement benefits through your employer
Your employer may offer coverage designed to help replace income lost to illness or injury:
- Disability insurance typically pays a percentage of your salary until you return to work or for a period set by your policy.
- Workers' compensation provides benefits to offset your expenses and lost income resulting from an on-the-job injury.
- Critical illness and accident insurance typically pay a lump sum when you're diagnosed with a covered condition or have a covered accident.
Check with your employer now, since some plans vary and could require you to enroll before a disability occurs.
Being proactive
Whether you're already out of work or feeling healthy today, these strategies can help you pay your bills in the future.
Create a barebones budget
According to the Federal Reserve, 37 percent of Americans can't cover an unexpected $400 expense without borrowing or using a credit card.3 If you have an emergency fund, make it last longer by budgeting for just the essentials, like groceries, rent, transportation and insurance. A budgeting app may help you stay on track too.
Remember that (almost) everything is negotiable. Call your service providers to ask for better rates. If you can't pay on time, contact them before the bill is due. Many utilities and wireless carriers will set up payment plans if you ask in advance. You can also raise some extra cash by selling items you no longer need, either online or at a local consignment shop.
Save on groceries
Store apps with digital coupons, cash-back apps and store brands can all help trim your grocery bill. To save even more, stack coupons or shop on double-coupon days.
Cut nonessential expenses
Streaming your favorite shows is good medicine during recovery. Still, review how many services you subscribe to and what they cost. You can always resubscribe later. Consider a lower-tier or prepaid phone plan and ask your carrier about discounts. Gym memberships, dining out and coffee runs are other easy places to cut back.
Prioritize credit card payments
Pay what you can, even if it's just the minimum. Missed payments bring late fees and can hurt your credit score, since payment history can be one of the biggest factors in your score. If you're charged a late fee, ask to have it waived. You can also ask about lowering your interest rate or annual fee. Your creditor may offer hardship programs that let you defer, reduce or pause payments.
Apply for government programs
State and federal programs can help with costs like rent, utilities, food and medical care. If you've lost your job, check your state's unemployment insurance program. The Supplemental Nutrition Assistance Program (SNAP) helps low-income families buy groceries. The Low Income Home Energy Assistance Program (LIHEAP) helps with heating and cooling bills and with weatherization assistance/repairs. Eligibility requirements apply.
Explore credit protection options
Before an illness or injury affects your finances, consider payment and credit protection programs to help ease financial concerns in case you lose your income.
- Credit life insurance reduces or pays off your insured loan balance if you die.
- Credit disability insurance covers your loan payments, up to the contract limit, if you become ill or disabled and are unable to work.
Both can help protect your family and your credit rating.
