A 25-year-old slips on ice, injuring her back, causing severe pain and limited mobility. She’s forced to move back in with her parents because she can longer pay her rent.
A 45-year-old doctor injures his arm in a serious car accident, which prevents him from performing surgery. His wife tries to return to work, but has limited opportunities and earning power thanks to being out of the workforce for several years. It’s not long before the bills pile up.
In both cases, unexpected injuries leave victims unable to earn an income. However, in both cases, if the injured person had a long-term disability insurance policy in place, those hardships may not have occurred.
Disability insurance coverage feels like an unnecessary expense, since it isn’t required by law like car, homeowner’s or health insurance. Why spend money on coverage, when the chances of becoming disabled or being unable to work at all are so slim? Except that the chances of being disabled are better than you might think. It’s impossible to predict the future, and even if you are healthy and able-bodied today, you might not be next week, next month or next year. That’s why you can’t let any of these excuses keep you from making a smart financial decision.
“I Won’t Become Disabled”
According to a study conducted by The American College, more than 50 percent of the respondents believed there was a less than five percent chance that they would ever become disabled and more than half weren’t even concerned about the possibility of becoming disabled.
However, accidents and illnesses can have a major impact on finances. For example, arthritis is the leading cause of disability, followed by back/spine issues, heart trouble and diabetes — all of which are common conditions. Assuming that you’ll never be unable to work because of one of them is simply not responsible or realistic.
“Insurance Companies Just Want to Take My Money”
Some people don’t buy disability insurance because they feel it’s too expensive, or that the insurance companies inflate the risk just to make a profit — and then turn around and refuse to pay claims. While some disability claims are initially denied, and policyholders have to seek help from a disability insurance attorney like the professionals found at disabilityinsurancelawyers.com, most legitimate claims are paid in accordance with the policy. Yes, purchasing a policy does cost money, but the comparatively small amount that you’ll pay now will seem like a bargain when you need those payments to cover your expenses later.
“Social Security Disability Will Cover My Expenses”
While the government does have programs to help those who are physically or mentally unable to work, it’s not easy to access those funds. In most cases, you need to be completely disabled without any hope of recovery for at least one year before your application will even be considered, and even then, it can take months for your application to be approved. By the time that the payments start coming in — and the average benefit rarely exceeds $2,000 per month — most people will have used all of their savings and already be in a tough financial spot. Disability insurance coverage, on the other hand, kicks in sooner and may have a higher benefit amount.
“I’m Covered by My Employer”
If you assume that your employer’s disability insurance will cover your disability, you could be in for an unpleasant surprise. Some employers offer employees the option to purchase discounted disability coverage, but do not automatically offer the insurance as a benefit. Also, disability insurance is not the same as worker’s compensation insurance, which will provide some financial support if the accident or illness is work-related. Be sure you understand exactly what your employer offers before you dismiss the idea of buying LTD insurance.
“I Have Savings”
Financial advisors counsel clients to save at least six months’ worth of expenses to cover emergencies. While a reserve is always important, most disabilities last longer than a few months. Unless you are wealthy, and losing your income isn’t going to affect you that much, you cannot assume your cushion will last as long as you’re out of work. In short, purchasing disability insurance helps keep you financially solvent longer.
Disability insurance is not a panacea for everything that can go wrong if you are no longer able to work, but it does reduce the likelihood that you will face serious financial woes in addition to your physical ailments. It’s time to stop making excuses and start looking into your policy options. You’ll sleep better at night knowing that an unfortunate accident or serious illness won’t hurt your family financially.