|
Surprisingly, single people often need disability insurance more than married couples because they don't have a spouse's income to fall back on if they are injured or become too sick to work. On the other hand, most married people have a hard time imagining what it would be like to live on one salary when they barely get by on two. And unfortunately, disability strikes more often than you may think.
If you are dependent on your paycheck or income and couldn’t financially survive without it, you are a candidate for disability insurance. If you became too sick or too hurt to work, you would lose your current and potential income and what it provides.
You may think the chances of your becoming disabled are slim, but statistics tell a different story.
- Approximately 54 million Americans currently have a disability. That's 21 percent of the total population of the United States.1
- Each year nearly 1 in 5 people will become disabled for one year or more before the age of 65.1
- Nearly 50 percent of all home foreclosures are caused by unforeseen disabilities.2
- Nearly 70 percent of all disabled people that apply, are rejected for Social Security benefits*.3
* Social Security Disability Benefits are reserved for people who are totally and permanently unable to do any job, and may not cover all interruptions of income due to injury or sickness.
1 McNeil, J.M. (1997) Americans With Disabilities: 1994-95, "U. S. Census Current Population Report," PP 70-61, Washington, D.C.: US Department of Commerce.
2 Mortgage Foreclosures in the U. S. (1990) "Million Dollar Round Table Reference Guide," PP 6.15.1.
3 Social Security Annual Statistics (1999) "Social Security Bulletin," Vol. 63, No. 2, 2000.
Even if you have a group policy, you still ought to consider supplementing with an individual policy to fill in the gaps.
Group Policies:
- Group policies are usually offered without any medical questions and are offered to all employees. Naturally the insurance carrier is more concerned about who may become covered. As a result, they contain restrictive policy language to reduce risk to the carrier. There are strong incentives to return to work quickly during disability.
- Coverage can be terminated either by the employer or the insurance company at any time.
- Benefits may be taxable to you during disability if your employer pays the premiums.
- You have to provide evidence of good health. The insurance carrier can decide not to insure you. As a result, the insurance carrier can be picky whom they offer coverage to. The good news is this allows the company to be more liberal with policy provisions, providing you with better policy definitions.
- The policy is portable. You may take it with you throughout your career and job changes.
- Coverage cannot be cancelled by the insurance carrier as long as you pay your premiums on time.
- Benefits are usually tax-free income during disability if you pay with personal dollars.
- It is important to think long term and consider the potential devastating effects of losing your income. This chart shows how much you may earn in your lifetime.
|
Potential Earnings to Age 65
(with 5 percent annual salary increase)
|
| AGE |
$50,000 |
$100,000 |
$150,000 |
| 30 |
$4,516,000 |
$9,032,000 |
$13,548,000 |
| 35 |
$3,322,000 |
$6,644,000 |
$9,966,000 |
| 40 |
$2,386,000 |
$4,773,000 |
$7,159,000 |
| 45 |
$1,653,000 |
$3,307,000 |
$4,960,000 |
When protecting your most valuable asset, ask yourself, "How long could I live on my savings if my income stopped this very second?" It's shocking that in the richest nation in the world, many people are within six weeks of personal bankruptcy.
Top of Page
|
|
