Let's Get Honest About Disability Insurance
Ah, disability insurance. You’ve probably heard that you’re supposed to have enough savings to pay your living expenses for six months. Can you honestly say you have that much saved? According to a 2013 Bankrate survey, less than one in four Americans do. Approximately three-quarters of Americans are living paycheck-to-paycheck, with little to no emergency savings.
So, what happens if those paychecks stop coming in due to an injury or an illness that prevents you from working?
This is where disability insurance kicks in – it helps protect your paycheck. If you can’t work due to an injury or illness, disability insurance will pay a portion of your salary until you can return to work. This can be a life-saver (or at least a "financial life" saver!). So, why is it that only 49 percent of U.S. workers have short-term disability insurance and only 44 percent have long-term disability insurance?
Here are the three misguided reasons why many individuals believe they don’t need disability insurance:
MISGUIDED REASON #1: I’m young and healthy. Disability insurance is for older people.
THE TRUTH: The Social Security Administration estimates that the average 20-year-old worker faces a 3 in 10 chance of being disabled at some point before they retire.
MISGUIDED REASON #2: The government will take care of me.
THE TRUTH: Most long-term disabilities are a result of an injury or illness that is not work-related, which means it wouldn’t be covered by Workers’ Compensation. If you’re relying on Social Security disability benefits, you should know the average monthly payment is just $1,100, which is lower than the United States Department of Health and Human Services (HHS) poverty level for a family of two.
MISGUIDED REASON #3: My employer will take care of me.
THE TRUTH: According to the US Department of Labor, seventy percent of private employers don’t offer long-term disability insurance.
The Bottom Line on Disability Insurance
The average long-term disability claim is 34.6 months (just shy of 3 years!). If you rely on your paycheck (and who doesn't?) you should have disability insurance.
American Insuring Group can help you determine if you have enough disability insurance coverage or if you need an individual disability insurance policy to fill any gaps in the event of an injury or illness. Contact us at (800) 947-1270 or (610)775-3848.