Ten Things That You Need To Know About Disability Insurance:

Did you know that . . .

  • 3 in 10 workers entering the workforce today will become disabled for some period of time before they retire (Social Security Administration, Fact Sheet, January 31, 2007)?
  • More than 90 percent of disabling accidents and illnesses are not work related, which means they aren’t covered by worker’s compensation insurance (National Safety Council, Injury Facts, 2004)?
  • Most Americans don’t have enough savings to meet short-term emergencies (2004 National Investment Watch Survey)?
  • Disability was behind nearly 50 percent of all mortgage foreclosures (Health Affairs, the Policy Journal of the Health Sphere, February 2, 2005)?
  • 56 percent of workers who currently receive Social Security disability benefits are under age 55 (Social Security Administration, 2007 Annual Statistical Report)?
  • Nearly 60 percent of workers have not discussed with their families how they would handle or manage an income-limiting disability (Council on Disability Awareness, 2007 Disability Awareness Survey)?
  • 1 out of 8.63 – odds that you will die during your working years, ages 18 to 65 (Social Security Administration, Period Life Table, 2007)
  • 1 out of about 1,250 – odds that you will lose your house to a fire, according to various industry sources
  • 1 out of 55- odds that you will have an automobile accident that results in property damage, injuries, or fatalities, according to the National Highway Traffic Safety Administration (“Traffic Safety Facts 2009”)
  • 1 in 3 (approximately)- odds that you will become disabled at some point during your working life. We protect our other assets, but we often neglect to protect our most important asset: our income.

If you’re like most people, you probably found these statistics surprising. Most of us tend to think about auto insurance, homeowner’s insurance, and even life insurance. Yet, dollar for dollar, long-term disability insurance may be one of the most important financial planning and protection resources available to you.

Ironically, as the preceding statistics reveal, most of us are spending money to protect ourselves and our possessions against events that are less likely to occur. The payouts for those other forms of insurance pale in comparison to the potential payouts—and, more important, the financial protection—of dis- ability insurance. Just look at these calculations: For car insurance, the average payout is approximately $28,000 (Motor Trend, April 30, 2003). For life insurance, it’s $257,200 (U.S. Census Bureau, March 24, 2004). But for disability insurance, the projected payout for a 35-year-old who earns $50,000 a year and is disabled for the rest of his or her life with an eligible benefit of 60 percent would have an annual benefit of $30,000 for a total payout of $900,000 (until retirement age of 65)!

Despite all of these statistics, and despite the severe potential financial impact of a disabling illness or injury, men and women often overlook the purchase of long-term disability insurance (sometimes called disability income insurance) in their financial planning.  To learn more, check out “The Questions and Answers on Disability Insurance Workbook” which is a step by step guide to evaluating your disability insurance needs, purchasing the right policy, monitoring your policy and making a claim:

 

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