Living Dangerously: The Lies We Tell Ourselves about Disability Insurance

Do you have disability insurance? Many of us don’t. A survey by The Consumer Federation of America and The American Council of Life Insurers found that 82% of people do not have long-term disability insurance or believe their coverage to be inadequate. One-third of working adults say that their families could only live for three months or less on their savings if the primary wage earner lost his or her income due to a disability.

The non-profit LIFE Foundation has compiled six common excuses people use for not buying disability insurance.

1. I am in good health; I won’t become disabled
   The odds may surprise you.  According the U.S. Census Bureau, nearly 1 in 5 Americans will become disabled for a year or more before the age of 65.  An illness or accident that keeps you out of work can be very costly because medical bills, prescriptions and other unforeseen expenses must be covered on top of what it already takes to care of your family and cover everyday costs.
2. I’m not in a dangerous line of work
   Many people assume disabilities are caused by freak accidents, but the National Institute on Disability and Rehabilitation Research reports only 13% of disabilities are a result of injury.  The vast majority of long-term absences are actually due to illnesses.
3. Worker’s compensation will cover me if I become disabled
   That’s simply not true. Worker’s compensation only covers you if you get injured, ill or die as a result of your job.  Most employer- or government-sponsored worker’s compensation programs pay only limited benefits and follow strict guidelines.  Purchasing personal disability coverage will ensure that you are financially protected in the event you become disabled outside of the job.
4. Social Security benefits will be enough
   Don’t bank on it.  It is extremely difficult to qualify for Social Security disability benefits, and roughly 70 percent of those who apply are denied.  Your eligibility depends on whether or not you are incapable of working at all, not just your usual occupation, and if your condition is expected to last a year or more or to result in death.  If you do qualify, it takes five months or longer for benefits to kick in and, on average, Social Security pays out just over $800 a month, slightly better than today’s poverty guidelines.
5. I don’t need individual coverage, because I’m covered through work
   Find out how much coverage your employer provides by talking to your company’s benefits or human resources office. Does your company policy cover short or long-term disabilities, or both? How much will you be paid in benefits?  Many companies offer their employees the opportunity to increase coverage through automatic payroll deductions.  Or you can also supplement your coverage by purchasing disability insurance on your own, to ensure that your coverage will stay with you even if you change jobs.
6. I’m too young to worry about disability insurance
   The world may be your oyster, but your earning power is your greatest financial asset and the one you should be worrying about the most.  According to the National Association of Insurance Commissioners, people in their 30’s are three times more likely to suffer a disability than they are to die.  You may have enough money in the bank to pay the bills for a few weeks or months, but what will cover you down the road when the bills start to pile up and you are not earning an income?

For additional questions to ask when purchasing disability insurance and other helpful tips, visit LIFE’s website at www.lifehappens.org.