May Is Disability Insurance Awareness Month

Spring is here, and May is the month we honor our mothers and look forward to summer vacation. May is also Disability Insurance Awareness Month. Today, many Americans depend heavily on the income from their job for survival. But what would happen if you were no longer physically (or mentally) able to perform your work?

Would the government take care of you? Maybe; but statistics show that about two-thirds of applicants are denied Social Security Disability benefits, and over 80% are denied again upon appeal. To make matters worse, the Social Security disability fund is reportedly going broke by the end of 2016, so we should not count on approval rates improving any time soon.

So with little hope of receiving disability benefits from the government, a debilitating injury can have disastrous consequences for working Americans. All the money you have worked hard for and saved over the years would quickly evaporate, leaving you and your family on the road to insolvency.

What Types of Disability Insurance Can I Purchase? To protect your family from financial catastrophe, there are two general disability insurance products to choose from:

• Short-Term Disability (STD)
• Long-Term Disability (LTD)

As the name indicates, short-term disability is for illnesses and injuries from which you expect to recover within a year or two. The coverage kicks in almost immediately (within 0 to 14 days with most policies) and benefits are paid for a maximum of two years. Short-term disability is often used in conjunction with a long-term plan to provide benefits not only for short-term injuries, but to fill in the gap in coverage while waiting for LTD benefits to kick in.

Long-term disability is for illnesses and injuries that are expected to keep you out of work for an extended period of time. There is an initial waiting (a.k.a. elimination) period of a few months up to a year depending on the policy, and benefits may be paid out for several years and in some cases the rest of your life.

How much does Disability Insurance Cost? The cost of a disability insurance policy depends on your age, gender, occupation, income, health, and type of policy. For example, a 30-year old with a 90-day elimination period and a $2500 monthly benefit can expect to pay between $35 and $50 per month (or in some cases more depending on health and occupation) for a long-term disability policy. The same type of policy for a 50-year old could range from $70 up to $100 per month or more. So in this example, one month of benefits (at $2500 per month) would cover more than two years of premiums, even if you were paying $100 per month.

Do I Really Need Disability Insurance? If you have a lot of savings and sizable investments and could live comfortably without the income from your job, you probably do not need a disability policy. But if your paycheck accounts for the vast majority of your monthly income, you should definitely consider it. To find the right policy to fit your needs and budget, it is best to speak with an independent disability insurance agent. Independent agents work with several of the top insurers in your state, and since they are not captive to any particular company, they can shop around for you to find the best policy for you and your family.