Do I Need Disability Insurance
Most Americans believe they already pay too much for insurance. So when they look at an optional product such as disability insurance, the obvious question is “do I really need this?” After all, you are probably in good health and do not foresee anything catastrophic happening to you.
An interesting 2016 survey by the Life Insurance and Market Research Association (LIMRA) found that 72% of respondents believe that most people need disability insurance. However, when asked if they personally needed it, that percentage that responded in the affirmative shrank to 55%. When asked if they actually carry disability insurance, only 33% answered “yes”.
The results of this survey indicate a very wide gap between the general belief that most people need to have insurance in the event of a long-term disability and the translation of that belief into action. This is largely due to the common belief that “it won’t happen to me.” Unfortunately, statistics indicate otherwise.
According to the Council for Disability Awareness, over 37 million Americans are classified as “disabled”, and over half of those who are disabled are ages 18-64, which are typically considered your working years. In addition, about 30% of Americans between the ages of 35 and 65 will suffer at least one disability lasting over 90 days. For many families, this type of situation can lead to a home foreclosure, bankruptcy, and other adverse financial circumstances if they do not have some kind of protection.
Will I Be Covered by Worker’s Compensation and/or Social Security Disability: Most employers are required to provide worker’s compensation insurance for their employees. Worker’s comp is a program that provides no-fault coverage to employees who suffer a work-related injury or illness. While this coverage might be available if you become disabled, it is far from guaranteed. Workers’ compensation covers only disabilities that are work-related, and there are several restrictions that can limit your ability to collect benefits.
Social Security Disability Insurance (SSDI) is a program administered by the federal government that provides disability benefits to qualified workers. The problem with SSDI is that the types of injuries and illnesses that qualify for the program are very limited, and about 7 out of 10 claimants are denied benefits. Even if it appears that your injury or illness should qualify, the SSDI application process is complex and protracted, and unless you are familiar with the system, getting approved will be an uphill battle.
Find the Disability Coverage that is Right for You: For most working adults, their most important asset is their ability to earn a paycheck. Unless you have significant financial assets, you (and your family) count on your paycheck to keep a roof over your heads and put food on the table. If you do not have sufficient coverage in the event of a disability, you are exposing yourself to severe financial hardship.
Finding a disability policy that fits your needs can be a challenge. There are many options available, and the right option will depend on your specific circumstances. The best place to start is to speak with an independent insurance agent. Independent agents have access to several of the top insurers in your state. Because they are not captive to any particular insurance carrier, they are able to shop freely and find the disability coverage that is right for you.