What if I told you your most valuable asset is your ability to earn an income? Have you considered what you would do if you were in a car accident, diagnosed with cancer or hurt your back simply by taking out the trash?? How would you replace the income you bring home every month to provide for your family?
According to USA Today ‘Should You Consider Disability Insurance’ one in four people who are in their twenties today will need to collect disability by the age of 67. One in four!!
Medical Insurance covers your medical costs. Life Insurance takes care of your family if you were to pass away. Long Term Care Insurance pays for your care (dressing, bathing, eating, transferring, etc.) should you become ill or injured. Disability Insurance helps to replace your income if an illness or injury prevents you from working.
Back trauma. Mental Illness. Car Accident. Cancer. These are not things that happen to other people. They are happening to people we love…to us.
If you think you have it covered by Social Security benefits or by your employee benefits you may be mistaken.
According to Policy Basics: Social Security Disability Insurance the average disability distribution paid by Social Security in 2013 was $1,146 per month ($13,757 per year). You will only qualify for Social Security benefits if you have worked and paid enough over the years in Social Security taxes.
IF...if you have group disability benefits (benefits paid through your employer) they will typically not be enough to cover the loss of income if you are unable to work. Most group plans will pay out 50-60% of your income AND they usually have a cap on the amount of money and the length of time you can receive benefits.
Perhaps with Social Security and your group benefits you MIGHT have enough to cover a short term disability. You may not if your illness or disability is long term.
This may leave you with quite the shortage in replacing your income. I will say it again….one in four of us will probably need some sort of disability coverage by the time we are 67. Something to consider...the longer you wait to purchase insurance the older you become....thus the more expensive it will be. Without sufficient coverage, what kind of hardship will your disability and inability to work place on your family?
The best place to start in determining if what you have is enough….calculate your monthly expenses. What expenses are a fixed cost every month (required expenses)? This gives you a baseline for determining what kind of coverage you need. Compare that against what kind of benefits you currently have. Take advantage of your human resource department to understand your employee benefits.
Secondly, there are companies like Aflac who provide supplemental insurance should you determine you need it. But...you need to apply before you become disabled. Insurance companies will not insure you and pay you benefits after you have become disabled. You need to do it now.
Lastly, if you need a recommendation for a financial advisor who can help you understand your benefits and help advise you to make educated decisions I know of many!! :) (That is not why I’m writing this. I’m not paid or endorsed by anyone….I just happen to have worked in the industry for many years.)
About 18 months ago I met a young lady who was recently widowed. Her husband had suffered and passed away from pancreatic cancer a few months prior to meeting me. She said one of the biggest blessings from the experience was the insurance policies her husband had purchased a few years before his diagnosis. His disability insurance replaced his income when he had to stop working. This allowed her the time to be with him during his final months. Otherwise she would have been behind a desk, instead of by his side. His Long Term Care insurance paid for the care he needed during those final months so she could be his wife and not his caregiver.
Life is unimaginably difficult if you are disabled or suffering from an illness. If you can, take financial hardship off the table. Try to take some time right now to think about what it is you need to take care of yourself and your family if luck misses your doorstep.