Long Term Disability

Typically when you think of protecting your assets you think of your home or car. Another area of insurance that you are keenly aware of is insurance to cover medical expenses. However, you tend to forget that what allows you to afford these items is your earning potential. This is where disability insurance becomes so critical.

If you are the primary wage earner for yourself and your household, imagine for a minute what life would be like if that income was no longer there. This scenario is much worse than being laid off or having temporarily suffered a loss of job where there is a strong conviction to find alternative work. All of your monthly bills from groceries to mortgage payments would still be due, month after month. A disability that prevents the income that you have come to rely on could be a serious financial threat to your family. It will immediately jeopardize your feature and will quickly threaten your present lifestyle. Disability insurance will protect you and your family from this potentially frightening situation.

COMMON MISCONCEPTIONS
"I am in good health, I know I can earn a living."

This is a common misconception. People can become disabled in many ways; workplace injury, car accident or the onset of a debilitating medical condition. Statistically between the ages of 35 and 65 seven out of ten people will become disabled for three months or longer.

"Will not Social Security help me?"
Social Security benefits are extremely difficult to qualify for and take a great deal of time to finally start. You must prove that not only are you incapable of performing your usual occupation but any occupation. In addition, the benefits most likely will not meet your financial obligations. The maximum payment for a 30-year-old earning $70,000.00 per year is $1,600.00 per month.

What about employer provided group disability or worker compensation coverage?"
Workers compensation only covers individuals that have been injured on the job and those benefits are typically quite low and do not come close to covering your earnings. Group disability plans through an employer are not prevalent, less than 41 % of companies with over 100 employee s and less than 19% of companies with under 100 employees provide this coverage. Also these benefits will not be adequate to replace income.

STATS

When making a decision regarding disability insurance, consider the following:
  • Social Security denied 55 % of 1.4 million applications it received.

  • 1998 - 35% of Social Security disability claims were approved.

  • Over 5 months must pass before Social Security will pay on an approved claim

  • Social Security requires that you cannot perform "any" gainful work.

  • Social Security demands that the disability must last at least 12 months.

  • Between the ages of 35 and 65 seven out of ten people will become disabled for 3 months or longer

  • One out of seven employed people will be disabled for 5 years or more before age 65

  • Average long-term loss due to disability is over 5 years.

  • Average American household only has two months worth of savings in reserve.

  • Workers compensation coverage only covers injuries that occur on the job