Why You Should Care About Disability Insurance

Disability Insurance for Individuals

A recent survey of over 7,000 adults by GOBankingRates found that 34% of adults have no savings and 35% had less than a thousand. That’s almost 70% of adults who would be very poorly prepared to deal with no income. According to the Social Security Administration, more than 25% of all 20-year-olds will experience a disability for 90 days or more before the age of 67. These numbers clearly demonstrate a disconnect and a financial risk you should know about.

No one ever thinks it will be them to get in an accident or fall ill. If we did, people would never leave their homes. But that is exactly the point. These are unforeseen events that would be wise to plan for.

Did you know that despite the average disability claim lasting only 13 months, mortgage foreclosures from disability occur 16 times as often as they do for death? And still, more than 40% of full-time workers do not have coverage.

There are a few reasons why people may shrug off the need for disability insurance. When it comes to the term “disability” many consider that to mean a worst-case scenario. Whether that is a spinal cord injury or an amputation, it’s extreme. But the fact of the matter is that the majority of disability claims result from more common illnesses that can have a slow onset, like diabetes or cancer.

Another reason why people neglect to go out and get a cashsick is that they assume they are already insured. Disability insurance is not the same as workers compensation insurance (workers’ comp). That only covers injuries on-the-job. In fact, according to the National Safety Council, 73% of long-term disabilities don’t even occur in the workplace. Additionally, in the instance that an employer does offer disability insurance, it is generally what is considered “short-term” and rarely covers your leave of absence.

Workplace Assumptions

According to the U.S. Department of Labor, 70% of employers don’t offer any form of long-term disability protection. That means that if you are injured or become ill for an extended period of time, you will be cutting into your savings as income.

If you are lucky enough to have an employer offer disability insurance, you should check to see if it is short or long term. Chances are it is shortsince they would like to encourage you to return. Even long-term disability benefits under an employer, however, may not benefit you. Typically, the longer the payments are, the lower the percentage of pay you are receiving.

If your place of employment fails to provide you with any sort of safety net, there are only a few states that offer disability insurance protection, or what is known as a TDI program (Temporary Disability Insurance). The following six states offer TDI:

• New Jersey
• California
• Rhode Island
• Hawaii
• New York
• Puerto Rico

If you do not happen to live in these states and you become sick or injured, there is no obligation by any agency to assist you. Even when you do reside in one of these six, the coverage is only temporary, and you will be expected to eventually return to work, or continue to provide for yourself.

Groups at Risk

It is hard to make a case for disability insurance sometimes because it is not tied to any concrete need in your life, like car or health insurance. However, there are certain types of people that would be deeply financially affected by an illness or injury. These groups are prime candidates for disability insurance due to their high-risk circumstance. If you fall into one of these categories, you should strongly consider getting a disability insurance quote.

Singles

When comparing the disability insurance individual vs. family, it becomes apparent that one of the highest risk groups are that of single people. Most individuals assume since they have no one else to care for, they will be fine. But what about you? Experts advise when seeking a disability insurance quote, it is best to look for something that replaces the most of your income (generally the highest is 60-70%). Even 13 months without income for a single person can be disastrous.

Seniors

Whether they are paying for college or additional assets, families that are established with older children generally have a significant amount of financial obligation. They also tend to have higher wages that will be a greater loss should an injury or illness occur. In the case where so many people may be relying on your income, disability insurance should be a major consideration here.

Young Families

With the current economic climate, even 13 months out of work could spell financial ruin for a young family. Bills like childcare and the mortgage would remain unpaid the longer you were absent from work. In this instance, disability insurance can be a necessity and a disability insurance individual plan may not be enough. As a group at risk, it’s important to understand which disability insurance quote will work best for you.

It becomes apparent that young or old, single or family, there is a dire need for an extra form of protection when it comes to relying on your health and income.This also means you cannot rely on programs like Social Security to be there when you need them.