If you haven’t considered protecting your income with disability insurance, there are a number of good reasons why you should. Many people have thought about what would happen if they pass away, but few have thought about the financial impact a long-term disability would have on them and their family. As an adviser, I can attest that financially speaking, a long-term disability can be worse than death.
Here are the top 3 reasons why you should consider protecting your income with disability insurance:
1. It happens!
Most people think that they will never be “disabled”, and they will always be able to work until they chose to retire. While that usually works out for most, for some it does not. One in four of today’s 20 year olds will become disabled during their working years.[1]
Common causes of disabilities are related to:
- Muscle, back and joint disorders, such as arthritis
- Nervous system disorders, such as multiple sclerosis
- Cardiovascular and circulatory diseases, including stroke and heart attack
- Cancer, including breast, prostate and leukemia
- Common mental disorders, such as depression
While most people think that accidents cause the majority of disabilities, it’s actually illnesses that causes 90% of all long term disability claims.[2] Since cancer, heart disease and strokes don’t care what you do for a living, having a “safe” office job doesn’t mean you don’t need to protect your paycheck!
2. The affects are devastating.
The average length of a long term disability claim is 31.6 months.[3] According to a survey by GoBankingRates.com, 69% of Americans have less than $1,000 in their savings account. Even those people not living paycheck to paycheck would have a hard time going, let’s say 2 years, without income. It’s simply not something that most people can self-insure.
It’s no wonder that a 2014 study of consumer bankruptcy filings identified disabilities as the third most common reason for bankruptcy, trailing medical bills as number two and a lost job as the number one spot on the survey. Consequently, both of those issues can also be the result of a disability![4]
3. It’s never going to be cheaper and more attainable than now.
Don’t put off buying a policy because you think it will be better to buy when you’re older. You buy disability insurance when healthy. We get calls everyday from people who want to buy a policy because they’ve just had a change in health, and now they foresee the need for this type of protection. They’re willing to pay any premium because they know they will be out of work at some point in the near future. Unfortunately after the injury or illness onset, it is too late to get the disability insurance. Like all insurance, you have to buy it before you need it to use it. Getting it while you’re young and healthy is the best.
Disability insurance pricing is also locked in at the age when you buy the policy. Buying it at age 35 is going to result in a much lower premium than if you wait until you’re age 45 or 55. In fact, when you add up the total premiums you’ll pay during your working career from age 35 to 65, that amount will almost equal the amount you’d pay if you had waited and only had the policy from 45 to 65, or from 55 to 65. Because as you get older, the price goes up, while the time period you have the coverage gets shorter.
The bottom line is that if you’re going to pay the same amount of money whether buying disability insurance at a younger age than an older age, the coverage is important enough to have and be protected over your entire career.
We work with all the major disability carriers in the market and would encourage you to talk with one of our disability insurance specialists to design a custom plan for you to protect your income.
Request a quote for disability insurance now.
Already have LTD insurance through your employer? Learn why this might not be enough…
[1] U.S. Social Security Administration Fact Sheet, June 2017
[2] Council for Disability Awareness, Long-Term Disability Claims Review, 2014
[3] 2011 Gen Re U.S. Individual DI Risk Management Survey
[4] Austin, Daniel A., Medical Debt as a Cause of Consumer Bankruptcy (2014). Maine Law Review, Volume 67, No. 1, pp. 1 – 23 (2014); Northeastern University School of Law Research Paper No. 204-2014. Available at SSRN. See especially Table 1. �
