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.
"Won't 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:
 | 1993 - Social Security
denied 55 % of 1.4 million applications it received. |
| 1998 - only 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. |
