For most of us, a regular paycheck is necessary. We need to make our mortgage payments, buy groceries, and pay the electric bill. However, what happens if you find yourself suddenly unable to work? How will your family handle that financial hardship? A sudden income reduction could have dramatic negative repercussions, leaving you wondering where to turn to keep the lights on or to stay current with your mortgage. Thankfully, it doesn't have to be that way. Long Term Disability Insurance can protect your financial stability and your peace of mind.
Like most other American families, you have ongoing financial obligations that must be met. You need to pay for your school loans. You have auto loan payments. You have a mortgage that needs to be paid. You need to pay the utility bill, for groceries, education costs for your children, and a great deal more.
However, accidents do happen. What will you do if you find yourself disabled and unable to meet your financial obligations? How will you provide for your family? You might assume that your employer-sponsored group long-term disability (LTD) coverage will suffice, but chances are good it will be too little, too late. Your employer might not even offer it (a growing number do not). What’s the solution to your financial worry?
Long Term Disability Insurance income (DI) insurance can provide the peace of mind and financial stability that you need and deserved. It protects your income when you are unable to work, delivering a reliable stream of cash to help ease financial burdens if you find yourself injured and unable to work, or too ill to work.
If you were asked, could you define disability insurance? Could you explain how Long Term Disability Insurance policies work? Don’t feel bad if you struggle. Most people find it difficult. Many people don’t even realize why they need this insurance protection in the first place.
In a nutshell, disability insurance is a layer of protection for your personal income. If you become ill, or you’re injured in an accident, your medical insurance will pay for treatment, medications, surgery and other necessities. You might have vacation and/or sick time that you can take, as well. However, what happens if you’re unable to work for a longer period? What will you do about income during that period? That’s precisely where disability insurance coverage comes into play.
What are the chances that you’ll be injured or become ill and unable to work for a lengthy period? If you’re like most of us, you downplay that risk. That’s natural – no one really wants to contemplate that particular prospect, but it is vital that you do.
According to the Social Security Administration, 2.3 million people applied for disability insurance in the US during 2016 alone. Note that this only includes those seeking SSID, and does not account for anyone with their own disability insurance coverage, or those who were ill or injured but did not apply for SSID. The official figures from the US government show that 25% of the working population will experience at least one period of extended disability by the time they retire. That’s one in four people.
The problem here is that most workers don’t carry long-term disability insurance, because they believe it is only applicable for those in high-risk industries. A firefighter might need that protection, but would an office administrator or a graphic designer?
Sadly, everyone needs this type of protection, and too few actually have it. Why? Simply put, illnesses, not accidents, account for up to 90% of disabilities that prevent people from working. That includes conditions like the following:
Those are only the smallest fraction of potential threats to your family’s financial stability. There are many others, ranging from autoimmune diseases to chronic health conditions stemming from lifestyle choices. Ramifications from eating the wrong foods, from smoking, or from recreational drinking can have profound repercussions on your ability to earn an income and provide for your family.
Another reason that many people forgo buying their own personal long term disability insurance is that they believe they’ll be covered by worker’s compensation. That’s why employers are required to carry this insurance, right? That’s true, but remember that worker’s compensation only applies to injuries or illnesses sustained on the job or while carrying out job-related duties.
For instance, if you slipped and fell in the office and broke your ankle, then worker’s compensation might cover your time out of work. However, what if you that same accident occurred in your own kitchen? What if your illness had nothing to do with your work environment at all?
In reality, worker’s compensation is usually not applicable. According to statistics from the US National Safety Council, 73% of long-term disabilities are the result of an accident or illness that had nothing to do with the workplace or the workplace environment. That means in almost 75% of cases, worker’s compensation does not pay out.
Perhaps you think that your state government will provide you with financial protection if you were to suffer an accident or illness not covered by worker’s compensation. That’s a natural assumption, but it’s probably incorrect.
Only a handful of states in the country – California, Hawaii, New Jersey, New York and Rhode Island, and Puerto Rico – offer any sort of short-term disability insurance. In those states, you may have coverage for up to six months. However, it’s not free. Workers have to pay for that protection through payroll deductions. If you live outside of those states, you have no state-provided disability insurance protection.
If you live outside the few states that offer short-term disability insurance, and you cannot qualify for worker’s compensation, then you might believe that Social Security Disability Insurance (SSDI) is the answer. This is a federal government provided disability program that is designed to provide protection for most workers. The problem is that qualifying for SSDI is no simple matter.
The Social Security Administration itself points out that 65% of applications for disability insurance coverage are denied initially. Even for those who are approved, the average monthly payout is just $1,130. That’s hardly enough to cover most household expenses.
For those who are denied access to Social Security Disability Insurance, have no case for worker’s compensation, and lack a state-provided disability insurance plan, it might seem like your employer would be able to help. Sadly, that’s rarely the case. In fact, according to information from the US Department of Labor, over 70% of employers in the country offer no long-term disability insurance options at all. Short-term disability insurance often does not provide enough to meet your financial obligations if you are ill or injured and unable to work for an extended period of time, either.
In most instances, you’ll find two types of employer-provided disability insurance in place today. The first, and most common, is short-term disability coverage. This insurance will replace a good portion of your income (but not all) for about three months. The second, and least common by far, is long-term disability insurance. This usually covers between 40% and 60% of your income, and will last longer than three months, although the exact duration varies wildly.
Your employer may give you the ability to improve the coverage offered by adding to the baseline protection out of your own pocket. However, it is up to you do that. Some companies offer no disability insurance at all, either short or long term, but give you the option to purchase it on your own at full cost.
You’ll find that buying disability insurance through your employer can come with at least a few benefits. One of those is that it is often easier to qualify for disability insurance protection, compared to going it alone. For that reason, it’s a good idea to check with your employer’s human resources department to learn if there are any options for disability insurance coverage on offer
Do you and your family rely on your income to meet your financial obligations? Would a disruption in that income result in serious financial problems and stress? If so, then disability insurance is certainly an important consideration.
For most families, it takes only about 30 days for the ramifications of a disabling illness or injury to start causing problems. By this point, you will have spent what money you had on hand, and may be facing the prospect of dipping into your savings to meet your financial obligations. You might not even have any substantial savings to dip into in the first place.
Remember that even if you do not have a risky occupation, there is still a significant chance that you will become disabled for at least 90 days before you reach the age of retirement. Also remember that 90% of disabilities have nothing to do with accident-related injuries and everything to do with illnesses.
Regular income is the only thing keeping your family afloat financially. It is the only thing allowing you to make your mortgage payments or rent, to buy groceries, to make your car payment, and to meet the needs of your children. How will you maintain your standard of living if you are unable to earn that income?
Obtaining disability insurance quotes is the first step toward achieving the protection and peace of mind that you need and deserve.
According to a recent Gallup Economy and Personal Finance poll, most American citizens would experience significant financial hardship within just a couple of months of being out of work. A third of the poll’s respondents stated they could last for a year or so. 26% said they could get by for four months. 29% reported being able to last about a month. 14% of respondents stated they would only last about a week.
Who are the best candidates for disability insurance protection? Virtually anyone can benefit from the financial stability offered by this insurance protection, but let’s break things down a bit more.
Think that because you are single you don’t need the protection offered by disability insurance? Think again. 60% of single workers have no disability insurance at all, and a survey by The Hartford indicated that one out of three Millennials would have to dip into their savings if they were out of work for more than six weeks. Two out of 10 actually reported they would have to use credit cards or dip into their 401(k) plans, and slightly more said they would have to ask for help or even move back in with their parents. Obviously, single workers need disability insurance coverage.
New families are perhaps the most obvious group to benefit from disability insurance coverage, as they often have the highest debt loads, and the most financial obligations, coupled with the costs inherent with raising young children and the fact that their earnings have not reached their peak yet. Sadly, too many young families forgo disability insurance to save a few dollars now, only to find that it costs them far more in the long run.
Senior families often have far more financial responsibilities than singles or young families, but they have more financial backing to meet those obligations. However, that means that a period without income would be that much more devastating to the family’s financial standing.
Disability insurance coverage is not just for families, or singles. It also provides peace of mind for business owners. How would you pay your employees if you were out of work for an extended period? How would you pay vendors and suppliers, or your rent and utilities? Disability insurance can help.
From the discussion above, it’s plain that disability insurance coverage is a vital consideration. However, finding the right plan and policy can be daunting, particularly if you’ve never shopped around or short-term or long-term disability protection before. Premiums can vary significantly depending a range of factors, including age, income, area of employment and policy provider to name just a few.
To help you navigate through this challenging area, we provide detailed consultations with trained, experienced agents. Our sole goal is to help you make an informed decision and gain the protection and financial stability that you need. We can help you determine your needs based on your income and expenses, and then help you identify the ideal insurer from top-names in the industry.