Disability Insurance

The chances of you becoming disabled during your prime working years are probably higher than you think. You can ignore the problem, but it’s hard to ignore the facts. About 12% of the total population (Over 37 million people) are classified as disabled, with approximately half of them aged 18-64 years old.(2) About 25% of today’s 20 year-olds will become disabled before they retire.(1)

Contrary to popular beliefs, accidents are NOT usually the culprit. Back injuries, cancer, heart disease and other illnesses cause the majority of long-term absences. The average individual disability claim lasts 31.6 months.(4), and can severely impact your ability to generate income. Most Americans don’t have the disability insurance or the emergency savings required to offset this loss of income.

As a result, many people, and their loved ones, could face serious financial hardship, possibly even foreclosure (medical problems contributed to half of all home foreclosure filings in 2006-(6)  and bankruptcy (medical problems contributed to over 60% of all personal bankruptcies filed in the U.S. in 2007-(5). People insure their homes, cars and personal property, yet they often fail to consider insuring the one thing that makes all these things possible – their income. This is evidenced by the approximately 100 million workers currently without private disability income insurance(1). Unfortunately, most people don’t realize how important protection is until it’s too late – after they become too sick or hurt to work.

Many people rely on Social Security or Worker’s Compensation to cover the loss of income resulting from a disability, but 65% of initial Social Security Disability (SSDI) claim applications were denied in 2012.(3), and the average monthly benefit paid by SSDI was a mere $1,130 a month for 2012, hardly enough to support an entire family. Furthermore, less than 5% of disabling accidents and illnesses are work related. The other 95% are not, therefore are not covered by  Workers’ Compensation.(7)

A disability plan can help Individuals by providing personal income protection for everyday living expenses while allowing you to continue saving for retirement. It can also help businesses by reimbursing owners for fixed business expenses, keeping business value intact by funding the buyout of a disabled owner and helping businesses offset the loss of a key employee.

Create a strategy with long-term care insurance

With proper planning, you can take control of your future. It’s not one-size-fits-all … there are numerous solutions that can work.   It’s important to evaluate your choices and find the option that works for you.

1)U.S. Social Security Administration, Fact Sheet February 7, 2013

2)U.S. Census Bureau, American Community Survey, 2011

3)U.S. Social Security Administration, Disabled Worker Beneficiary Data, December 2012

4)Gen Re, U.S. Individual DI Risk Management Survey 2011, based on claims closed in 2010

5)U.S. Courts, Bankruptcy Statistics, 12-Month Period Ending December 2007

6)Get Sick, Get Out: The Medical Causes of Home Mortgage Foreclosures, Christopher Tarver Robertson, Richard Egelhof, & Michael Hoke; August 8, 2008

7)Council for Disability Awareness, Long-Term Disability Claims Review, 2012

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