Disability insurance can help keep your cash flow going should you be hit by a disabling event such as an injury or a sudden illness that prevents you from working.
But besides protecting your income, disability insurance can also safeguard your retirement goals by giving you much-needed cash that may keep you from tapping your 401(k) for emergency funds. Having to withdraw funds from your 401(k) can be costly due to the lost prospects of investment income, as well as tax penalties that you’ll be hit with.
Think you wouldn’t do that? One in four consumers said they would make early withdrawals from their 401(k) or IRA plans if they were to suddenly become disabled, according to the “2022 Insurance Barometer Study” by LIMRA. Disability Insurance Can Protect Your Retirement Funds