Updated: Aug 5
Many people go about their day to day feeling fairly protected. They have their home protected with homeowners insurance, their car protected with auto insurance, and their lives protected with life insurance. They have a great career and are already making plans for the raise that comes with that expected promotion. The problem is what if that promotion never comes.
According to the Life Insurance Marketing and Research Association, 60% of people in the US had life insurance in 2018. That’s great, but according to the Society of Actuaries, the likelihood for a 30 year old to die compared to become disabled for a period of time was 25%. That means it is 4 times more likely to occur; yet, according to a OneAmerica poll, only 34% of employees surveyed say they have disability insurance.
Most workers are not prepared for the idea that they are not guaranteed an income – especially if they can no longer perform their job. It can be years after a disability before someone is treated and able to reenter the workforce, especially as insurance companies will commonly deny procedures and make patients fail multiple other options which takes lots of time.
But there is hope! Many businesses do offer long-term disability policies and you should absolutely sign up to get coverage. If you don’t have long-term disability offered, you can purchase an individual policy that would provide you with some coverage that can be a financial godsend.
Things to consider when you are looking at policies:
1) Does it cover any occupation or your specific occupation? You will want to have one that covers you if you can’t do your job, otherwise they can claim you are eligible to be a greeter in Wal-Mart.
2) How much of your pay is covered? It is very common for policies to cover 60-66% of your base pay but it might not cover other things like bonuses or stock options.
3) For how long will the policy be in place? There are policies that will get you through a transition period, and others that will get you to retirement or through death. Know what yours states.
4) How much time has to pass before the policy would pay you? This is known as an elimination period. Will it be 30 days until you receive a check, or 6 months? Having an idea on this will help you determine how much of an emergency fund you’ll need to weather a disability storm.
There are many ways to be covered for a long-term injury that disables you and makes it impossible to work. Know your options and set a plan in place to guard against that financial killer!
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Andrew Cremé and not necessarily those of Raymond James. Guarantees are based on the claims paying ability of the issuing company. Please consult with a licensed financial professional when considering your insurance options.