Disability Insurance Basics
Disability insurance replaces a portion of your regular income when an accident or illness keeps you from working. Your income is your most important asset, and disability insurance may be the difference between your family maintaining its lifestyle or making serious changes.
Disability insurance is most commonly offered as part of an employer’s benefit package but can also be purchased by individuals. There are two types of disability insurance – short term disability (STD) and long term disability (LTD).
Short term disability policies can vary in length of coverage (a couple of months up to one year) but generally are for six months or less. Short term disability is usually cheaper than long term disability as it covers a shorter period of time. If you can’t afford both STD and LTD, it generally makes more sense to purchase LTD. While most disabilities last only a short time, you may be able to survive a short term disability on your savings, on paid leave, or on your spouse’s income for a limited time.
Long term disability policies also vary in length of coverage; some last only five or ten years, but ideally you want one that covers you until age 65. Long term disabilities can have a severe impact on you and your family – what if you couldn’t work anymore? The bills just keep coming.
The odds of having a disability event are:
- An illness or accident will keep 1 in 5 workers out of work for at least a year before the age of 65
- The chance of missing at least 90 days of work due to a disability is just under 1 in 3
- The risk of disability is greater than the risk of premature death
- Approximately 90% of disabilities are caused by illnesses rather than accidents
- Less than 5% of disabling accidents and illnesses are work related. The other 95% are not, meaning Workers’ Compensation doesn’t cover them
Other things you should know about disability insurance:
- Social Security disability is hard to qualify for. 65% of initial SSDI claim applications were denied in 2012.
- Typically policies provide about 60% of your gross (before tax) salary
- In 2009, only 32% of workers were covered by group long term care disability insurance
- The definition of disability varies – make sure the policy your considering covers situations you view as likely.
- Costs can vary greatly depending on factors such as: the elimination period, benefit period (how long), age at the time of purchase, your occupation and income and medical history.
Everyone’s situation is different and unique. It is important to work with a licensed insurance professional. At Sansevieri Insurance we can help you determine the right amount of coverage in a policy that will fit your budget.
Call today for more information on disability insurance (949) 722-6078. Serving Laguna Beach and all of California.