Insurance Basics: Disability
BOSTON (CBS) - If you are unable to work due to an accident or an illness it is disability insurance that will protect you and provide an income stream for you and your dependents.
Recently I was made aware of a website, the Council for Disability Awareness. According to their website:
- Over 1 in 4 of today's 20-year-olds will become disabled before they retire.
- Over 37 million Americans are classified as disabled; about 12% of the total population. More than 50% of those disabled are between the of ages 18-64.
- The average disability duration is almost 3 years (35 months).
- Almost 8 million disabled wage earners are receiving Social Security Disability benefits.
So, do you need disability insurance? Well, who will support you if you can no longer work? Could you move in with your family? Would you want to?
Single workers need disability insurance. Families with children and a single worker need disability insurance. If you are a dual income couple, you both need disability insurance.
Insurance companies will not normally insure a worker for more than 60% of their current income. They want you to have some incentive to return to work after an injury or illness. If they guaranteed you 100% of your income you may not ever want to return to work.
To purchase disability insurance look to your employer first for that's where it will probably be the cheapest. Because of the inherent abuses in the system fewer employers are offering disability insurance and it is becoming more expensive. If nothing is available then you may need to seek outside resources.
If you are allowed to accumulate sick days and have accumulated 60 days or more you are probably covered for a short-term disability. Or if you have an emergency fund that will keep you afloat for at least 3 months. It will be the long-term disability that you need insurance coverage for.
Social Security does provide disability benefits. But it is difficult to qualify for Social Security disability benefits. You may be eligible for workers compensation that is provided by your employer and pays a disability benefit if the disability is job related.
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