Let’s Talk Disability

Let’s face it. We have some of the major ‘what ifs’ in our lives covered. We pay for #healthinsurance, #autoinsurance, and #lifeinsurance. But what about disability? Don’t think make the mistake of believing disability insurance is only applicable for major, unpredictable health conditions. According to Field Guide, National Underwriter in a 2004 article more than 43% of individuals age 40 and younger will be disabled for more than 90 days.

What happens then? 

Say you don’t have a personal or an employer sponsored disability policy …. How would you:

  1. Pay your bills while you are unable to work?
  2. Buy Groceries?
  3. Pay for sports, activities, and your children’s education expenses?
  4. Continue to save for your future in the fashion which you were used to prior to disablement?

How long would your savings or investment accounts last you? How long will your employer hold your position open if there is no set date of return to employment? Does your significant other make enough to support the household, or are you a single income household?

Many Americans consider disability insurance unaffordable, unobtainable, and unnecessary. We take our employer paid disability insurance for granted, thinking it will always be there. With our company length of tenure shrinking, leaving employees moving from job to job, who knows if there will be a disability policy in place to draw from if a disabling event occurs.

More food for thought:

  • Only 48% of working American adults, according to the Federal Reserve Report on the Economic Well-Being of US Households in 2016, have enough money saved to cover 3 months of living expenses.
  • In 2014 the most common causes of bankruptcy filings were as a result of
    • Medical Bills (26%)
    • Loss of employment (20%)
    • Major sickness or injury to an immediate family member (15%)

Most Disability claims are as a result of:

  • Musculoskeletal Disorders (29%)
  • Cancer (15%)
  • Pregnancy & related complications (9.4%)
  • Mental Health Disorders (developed over time or diagnosed 9.1%)
  • Unexpected Injuries (9%)

Applying for a disability policy takes into account multiple factors:

Age & Health History: Would you rather be young and healthy when you need a disability policy, or in your mid 40’s and joining a company who does not offer disability insurance? Disability is rated on age, very similar to life insurance. Applying earlier will give you a lower rate.

Occupation: The more specialized and physical your job is most likely the higher your monthly premium will be. Not always, but usually.

Monthly Income: Earnings comprise the last major factor of rating a disability insurance policy. Should you become permanently disabled your disability insurance policy pays you a monthly paycheck until you turn 65 on most policies, however depending on occupation you may only have 2, 5, or 10 years of monthly benefit checks. Review your policy to know the details.

Disability Insurance should be considered as important as life insurance. If you’re no longer alive the plan is to ensure our loved ones are able to move on, living in the same or similar manner which they were accustomed to prior to any unexpected occurrence, but what if you are still living, just not able to work? Trust me this happens more than we all care to believe.

On average a person collecting Social Security Disability payment only receive a benefit of $1,197 per month. Is that enough to cover the costs of your lifestyle at an expected delay of 3 to 5 months to receive any benefit? I know for me that barely covers my mortgage payment.

I have rationalized in my brain the order of what priorities I have and which place to designate for how important each are in my life. Disability insurance has always been an afforded benefit and luxury I have enjoyed through employers, however due to the unknown and how I seek to help others secure their financial future , I have moved disability insurance up the ladder to the top three. My family deserves protection, security, and wellbeing. Disability insurance provides that to me for less monthly than my internet bill. Priorities, priorities, priorities.

BE THE EDUCATED CONSUMER! Make the choice to apply for, or at least review quotes, for a disability policy. You might use it more quickly than you think.

 

Sources Cited

  1. Federal Reserve, Report on the Economic Well-Being of U.S. Households in 2016
    (PDF), page 26.
  2. Integrated Benefits Institute, Health and Productivity Benchmarking 2016 (released November 2017), Short-Term Disability, All Employers. Condition-specific results.
  3. Integrated Benefits Institute, Health and Productivity Benchmarking 2016 (released November 2017), Long-Term Disability, All Employers. Condition-specific results.
  4. Social Security Administration, Monthly Statistical Snapshot, February 2018

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