The need for Disability insurance is all too often underestimated.
Although most people wouldn't dare forgo necessary evils such as homeowners insurance, insuring a new car, or even obtaining life insurance, the need for disability coverage is often overlooked.
Underestimating the value of insuring earning power, especially considering the rate of personal savings in the U.S. is at an almost unprecedented low, could spell disaster if a disabling event were to occur.
Disability Insurance from a Worker's Perspective.
If you're one of those who think you don't need to purchase disability insurance because you figure it's unlikely you'll ever become disabled, prepare yourself for some alarming statistics.
According to government studies, younger individuals have about a one-in-three chance of suffering a disabling event before age 65, while older individuals face a lower but still significant risk.
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Others might be counting on alternative sources of income, such as Social Security Disability Benefits, to replace their income if they become disabled.
Although that benefit is available after a disabling event, it comes with many rules and regulations and a strict definition of disability.
The Social Security Administration generally evaluates a claimant's ability to perform any type of work, not only the tasks of their previous job, when determining eligibility for benefits.
Social Security Disability Benefits typically require that an individual be totally disabled with a condition expected to result in death or to last at least one year, so short-term or partial disabilities often do not qualify.
Many working people assume they have savings to carry them through a short-term disability, but personal saving rates in recent years have been low, and some households live paycheck-to-paycheck without emergency reserves.
Now that the risk is clearer, you may be curious how to buy disability coverage.
Most individuals generally find purchasing their disability insurance through their employer to be the most cost-effective and simple source.
For more information about individual options, see Personal Disability Insurance.
Disability Insurance from an Employer's Perspective.
Offering disability insurance in the workplace makes good business sense for employers because employees are among a business's most valuable assets.
Employers can offer disability insurance on a voluntary basis, allowing employees who want coverage to elect it and pay the premium themselves, or provide a base amount and let employees buy supplemental coverage.
Employers interested in examples of group plan approaches may review Elevator Distributors Disability Insurance for one model of group offerings.
Since lost work time from injury or illness has substantial costs, plans that include return-to-work and rehabilitation services are important considerations when selecting coverage.
Other valuable features include proactive management through early contact with the employee and physician, reduced benefits for partial return-to-work, and collaboration among the employee, medical provider, and employer to find flexible solutions that help the employee return to work.
Disability insurance plans have long been a highly valued benefit, and in today's economy such offerings are more important than ever to employees and employers alike.
If you want a quote or to review options, please talk to an agent.
Frequently Asked Questions
How likely am I to become disabled before retirement?
According to broad studies, younger workers face a meaningful risk—estimates commonly cited indicate about a one-in-three chance before age 65—while risk varies with age and occupation.
Will Social Security Disability replace my income if I am temporarily disabled?
No; Social Security Disability is generally reserved for total disabilities expected to last at least a year or to result in death, so short-term or partial disabilities often do not qualify.
Should I get disability coverage through my employer or buy an individual policy?
Employer group coverage is often more affordable and convenient, but some people buy individual policies to add flexibility or higher benefit amounts; choices depend on personal and job-related factors.
What features should employers include in a workplace disability plan?
Employers should consider return-to-work programs, rehabilitation services, early case management, and options for partial benefits to support both the employee and the business.