What is Disability Insurance?

Many Americans believe they are insurance poor. We are required to buy insurance on our vehicles, homes, and now health insurance is a federal requirement. So it is understandable that some would view Disability Insurance Awareness Month (DIAM) with some skepticism. After all, why do we need to dedicate a whole month to discuss this topic?

Part of the answer lies in the following statistics from a recent Council on Disability Awareness survey:

• 67% of Americans view their incomes as among their most valuable assets.
• 57% of working adults have no private disability insurance.
• Roughly one third of those surveyed say they would consider purchasing disability insurance if they knew more about it.

What is your most valuable asset? The Street Insider recently reported on the relatively low number of Americans that protect their incomes with the same diligence as they protect their homes. Most Americans take some steps to keep their homes safe. Here are some examples from the article:

• 90% say they lock their doors and/or windows
• 74% carry either homeowners or renters insurance
• 39% use some kind of alarm system
• 31% have a dog that helps guard the premises

Overall, 9 out of 10 Americans take at least some basic steps to protect their homes, while only around 40% carry disability insurance.

Although your home is certainly among your most valuable assets, how do most Americans pay for their homes? Unless you are one of the few that has been fortunate enough to pay off your mortgage, it is highly likely your income (in many cases combined with the income of your spouse) is what is financing your home. That being the case, should you not be just as diligent about protecting your means of paying for your home?

What about Social Security and Workers Comp? There is a common misconception among many Americans that they do not need disability insurance because it is offered through Social Security or Workers Comp. The problem is these coverages are only available for limited circumstances.

Statistics show that 65% of applicants are denied Social Security disability benefits during the initial application and an even higher rate (85%) are denied on the second try. As for workers comp, the National Safety Council reports that 75% of long-term disabilities are not work-related.

These numbers tell us that a vast majority of disability cases will not qualify for existing programs. So if you do not have a private policy through your employer or better yet purchased directly from an insurer (these policies offer more flexibility as well as portability between jobs), chances are you will not have any available relief if you are no longer able to work.

If you do not currently have private disability insurance, now is a good time to explore your options. To learn more, speak with an independent insurance agent that has access to several leading insurers in your state and the ability to find the coverage that best fits your needs and budget.