DISABILITY INCOME INSURANCE EXPLAINED

Why do I need Disability Income Insurance?

Let me ask you a question, how long could you live without your paycheck? 1 month, 3 months, 6 months?

Most Americans can’t live more than a month without their paycheck.

Disability is more common than you think. Just over 1 in 4 20-year-olds will become disabled before reaching age 67 (Social Security Administration, the facts about the Social Security Disability Program, 2019) Approximately 57 million Americans, or 1 in 5, live with disabilities, which represents about 19% of the population and 38 million disabled Americans or 1 in 10, live with severe disabilities. (Census.gov and Americans with Disabilities: 2010).

Disability income insurance is a type of insurance that provides you with a source of income if you become disabled and are unable to work. Here are a few reasons why you might need disability income insurance:

Protect your income: If you rely on your income to pay for your living expenses and support your family, disability income insurance can provide you with revenue if you cannot work due to a disability.

Cover medical expenses: If you become disabled and need medical care or rehabilitation, disability income insurance can help cover these expenses.

Peace of mind: Disability income insurance can provide you with peace of mind, knowing that you will be able to maintain your lifestyle and pay your bills even if you become disabled and are unable to work.

Employer-provided coverage may not be enough: While some employers offer disability insurance, the coverage may not meet your needs if you become disabled.

Self-employed individuals may need it: Disability income insurance can be particularly important for self-employed individuals or small business owners since they may not have access to employer-provided coverage.

In summary, disability income insurance can provide financial security and peace of mind if you become disabled and cannot work.

Isn’t Social Security Disability Insurance enough protection?

Social Security Disability Insurance (SSDI) provides income replacement benefits for people who have become disabled and are unable to work. However, whether or not SSDI is “enough” depends on your financial situation and needs.

SSDI benefits are based on your average lifetime earnings and are intended to replace a portion of your income if you become disabled and cannot work.

The benefits you receive will depend on your earnings history and the severity of your disability.

While SSDI benefits can help you meet your basic needs, they may not provide enough income to maintain your current lifestyle or cover your expenses. SSDI benefits are also subject to a waiting period before they begin, and the application process can be lengthy and complex.

Therefore, you may want to consider additional sources of disability income insurance to supplement your SSDI benefits. Short-term or long-term disability insurance can provide extra income replacement benefits and may help you maintain your standard of living and cover your expenses.

In addition, you may also want to consider other forms of assistance, such as Medicaid, Medicare, or supplemental security income (SSI), which can help cover medical expenses or provide additional financial support.

Whether SSDI benefits are “enough” depends on your circumstances and financial needs. It’s essential to evaluate your options and work with a disability insurance specialist to determine the best action for your situation.

What’s the difference between short-term and long-term disability?

Short-term and long-term disability insurance are two different types of coverage that provide income replacement benefits if you become disabled and are unable to work. Here are the key differences between short-term and long-term disability insurance:

Duration of benefits: Short-term disability insurance typically provides benefits for several weeks up to a few months, while long-term disability insurance offers a more extended period, often until retirement age or when you can return to work.

Waiting period: Short-term disability insurance policies usually have a shorter waiting period before benefits kick in, typically a few days to a few weeks. Long-term disability insurance policies often wait longer before benefits start, usually a few months.

Coverage limits: Short-term disability insurance policies often cover a smaller percentage of your income, typically around 60-70%, while long-term disability insurance policies may provide coverage for a larger percentage, often up to 80%.

Cost: Short-term disability insurance policies are usually less expensive than long-term ones since the benefits are typically paid out for a shorter period.

Coverage types: Short-term disability insurance policies usually cover temporary disabilities caused by illnesses or injuries that prevent you from working for a short period. In contrast, long-term disability insurance policies typically cover more severe disabilities that can last for an extended period, such as cancer or a chronic illness.

In summary, short-term disability insurance provides benefits for a shorter period with a shorter waiting period. In comparison, long-term disability insurance provides benefits for a more extended period with a longer waiting period and may cover more severe disabilities. The type of coverage you need depends on your specific situation and the risks you face.

Well, I hope I cleared that up for you. If you ever have questions about Disability Income Insurance or other insurance that may affect your Risk Management plan, please don’t hesitate to call me. My consultation won’t cost you a penny, and I’d love to be a resource for you and answer any questions you may have.