When people consider the risk of losing everything they own due to an accident or disabling illness, they often ensure that they have enough insurance coverage. People generally have health insurance, car insurance and homeowner’s insurance, but they often do not think about disability insurance.
Disability insurance covers a person who becomes disabled and can no longer work. Relying on Social Security disability may be insufficient as it can take up to two or three years to receive payments and Social Security disability benefits only cover those who cannot work at all. The advantage of disability insurance is that policies can provide benefits to the disable person if he or she is:
- No longer working in the same field of work
- Makes less money than he or she used to
Government studies show that there is a 30 percent chance that a 20-year-old person will become disabled before he or she reaches his or her full retirement age. The family of a breadwinner who becomes disabled is financially worse off than if the breadwinner dies because the person with a disability is a financial drain on the family finances.
According to the Bureau of Labor Statistics, only one-third of the workforce in private industry has private disability insurance. Usually, those with high incomes and the self-employed purchase private insurance policies, but it is available to everyone, and everyone should have private disability insurance coverage.
If you opt to get private disability insurance, you could start receiving checks within three to six months after learning you are not able to work. If you opt to get only what your employer provides, you will get a portion of your salary. Even if you have disability insurance through your employer, you should consider a private disability insurance policy to make up for what your employer’s disability insurance does not cover.
Source: Associated Press, “Overlooking disability insurance can be costly,” David Carpenter, July 25, 2012.
Our firm handles disability insurance claims for those who have been disabled due to injury or accident.