Your income is the foundation that supports your expenses, lifestyle, and future plans. What would happen if your paychecks stopped due to an accident or illness? If you’re unable to work due to a sickness or injury, disability income insurance can help you meet your expenses and maintain your standard of living.
Disability income insurance can help you pay bills like your mortgage, tuition, and car payments, and help cover the expenses for food, clothing, and utilities. By replacing a portion of your income, disability income insurance can help provide financial security until you get back on your feet and return to work.
Some statistics explaining the need for disability income insurance include:
- Just over 1 in 4 of today’s 20-year-olds will become disabled before they retire. ( Social Security Administration, Fact Sheet February 7, 2013)
- Over 37 million Americans are classified as disabled. More than 50% of them are in their working years, age 18-64. ( Census Bureau, American Community Survey, 2011)
- In December of 2012, 8.8 million disabled wage earners were receiving Social Security Disability (SSDI) benefits, and 2.5 million of them were in their 20s, 30s, and 40s. ( Social Security Administration, Disabled Worker Beneficiary Data, December 2012)
- 65% of initial SSDI claim applications were denied in 2012. ( Social Security Administration, Disabled Worker Beneficiary Data, December 2012)
- Less than 5% of disabling accidents and illnesses are work-related. The other 95% are not, meaning Workers’ Compensation doesn’t cover them. (Council for Disability Awareness, Long-Term Disability Claims Review, 2012)
- Approximately 90% of disabilities are caused by illnesses rather than accidents. According to the Council for Disability Awareness (CDA), the leading causes of new disability claims in 2012 include musculoskeletal/connective tissue disorders, cardiovascular/circulatory disorders, cancer, mental disorders, and injuries and poisoning.
Disability income insurance is designed to replace anywhere from 45% to 65% of your gross income on a tax-free basis, should illness keep you from earning an income in your occupation. The premium on your individual disability income insurance policy is determined based on the factors like your age, occupation, medical history, lifestyle habits, policy riders you choose, monthly benefits you intend to receive, and waiting period and coverage period for disability income.
Every disability income insurance policy is different and should be assessed based on the quality of plan created for your needs, and not by the cheapest disability income insurance policy on the market. Many consumers do not plan for the possibility that they will be faced with a debilitating accident or illness during their working years. A professional with a family, for example, should consider disability income insurance as a necessity. Individuals believe they may have disability coverage through their employer. This at times may be true, but the quality of coverage often leaves the disabled employee short of the protection he/she thought they had.
Think of disability income insurance as insurance for your paycheck. It ensures that if you are unable to work because of illness or injury, you will continue to receive an income and make ends meet until you’re able to return to work. You don’t hesitate to insure your home, car, and other valuable possessions. So why wouldn’t you also protect what pays for all those things – your paycheck.
