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Paycheck Protection
Wednesday, 15 December 2010 18:41

If you get sick or hurt, and cannot work, would you prefer a check or a get-well card? The most valuable asset most working Americans have is their ability to earn an income. If one cannot earn an income, and they don't have enough savings to retire, then they face financial difficulty.

The risk of disability is significant.

A working American is more likely to miss three months of work due to sickness or injury than total their car or suffer the loss of a home due to fire, yet people routinely purchase insurance to protect those assets.

If you lose your income, and your car and home are paid for from that income, then you will lose your car and home even though they are insured.

If you have health insurance, but lose your income due to sickness or injury, who is going to pay for your health insurance premiums? Health insurance does not pay for itself.

Many people believe the cause of disability is most likely to be work related, or a freak accident. While it is true that disability happens because of work related injuries or unpredictable accidents, but the truth might surprise you:

  • Illnesses like cancer, heart attack or diabetes cause the majority of long-term disabilities. Back pain, injuries, and arthritis are also significant causes.
  • Most are not work-related, and therefore not covered by workers' compensation.
  • Lifestyle choices and personal behavior that lead to obesity are becoming major contributing factors.

Here's some disturbing statistics:

32

At age 32, the chance of being disabled for 90 days is 6.5 times greater than the chance of death. (Source: National Association of Insurance Commissioners)

18%

More than 51 million Americans – 18% of the population – are classified as disabled. (Source: US Census Bureau, November 2008)

1 out of 3

Almost one-third of Americans entering the workforce today – three out of ten – will become disabled before they retire. (Source: Social Security Administration, 2007)

2.35 million

34,017 fatal crashes occurred in 2008, the lowest rate since 1961. But what about those who survived the carnage? In 2008, 2.35 million people were injured in car accidents. Car crashes are the leading cause of acquired disability in the United States. (Souce: NHTSA Fatality Analysis Reporting System)

75%

Seventy-five percent of disabilities are caused by an illness rather than an accident. (Source: Commissioner's Disability Table)

70%

Seventy percent of American workers in the private sector have no long-term disability protection. (Source: Social Security Administration, 2007

62%

A Harvard University report reveals that 62 percent of all personal bankruptcies filed in the U.S. In 2007 were due to the inability to pay for medical expenses. (The American Journal of Medicine, June 4, 2009)

3 times

The likelihood of being disabled for more than three months is greater than dying in any given year. (Source: Society of Actuaries)

1 out of 5

Accident or illness will force 1 in 5 U.S. Employees to miss work for at leat a year before they turn 65. (Source: Life and Health Insurance Foundation for Education, November 2005

Furthermore, the average long-term disability absence lasts 2 years. (Source: Commissioner's Individual Disability Table A)

49

In the past hour, almost 3,000 Americans became disabled. That's 49 disabilities every minute. (Source: National Safety Council, “Injury Facts 2008 Ed.”)

350,000

Every year, 350,000 personal bankruptcies are attributed to injuries and unexpected illnesses. (Source: “Illness and Injury as Contributors to Bankruptcy,” Health Affairs 2005)

$259,531

In the first year following paraplegia, living expenses average $259,531 per person.. (Source: National SCI Statiscial Center, 2005)

30%

Stroke is the leading cause of serious, long-term disability in the U.S. From 1995 to 2005, the stroke death rate fell 29.7% and the actual number of stroke deaths declined 13.5%. (Source: StrongCenter.org)

90%

Only a small fraction – 10 percent – of disabling accidents and illnesses are work related. The other 90 percent are not, which means workers' compensation doesn't cover them. (Source: National Safety Council, 2008)

$1,004

The average monthly benefit paid by Social Security Disability Insurance (SSDI) is $1,004 per month. (Source: Social Security Administration, 2008)

There is a solution:  Disability Income Insurance

Unfortunately, many Americans have not purchased paycheck protection, as you can see from the next image.

Even though 78% of Americans feel they would be devastated if they were unable to work due to a disability, only one out of ten have purchased Disability Income insurance.

Even if you have disability insurance provided by your employer, there is a significant financial risk. Ask yourself this question:

Can you handle a 30% cut in pay?

Because the typical group LTD, or Long Term Disability plan, pays 66% of salary. There is always a monthly cap, too. The most common cap is $5,000 per month. What this means to you is that if 66% of your salary is more than $5,000 per month, then all you would receive during a period of disability is $5,000 per month.

If you cannot handle a 30% cut in pay, then the solution is to purchase a personal Disability Income insurance policy, or DI Policy.

That's where a professional insurance agent can help.

The purchase of disability income insurance is a serious decision, with significant financial implications for you and your family. That is why it is always a good idea to use a professional life insurance agent when disability income insurance. The best choice is an insurance agent that has earned the professional designation, Chartered Life Underwriter.

Do you have a disability income insurance agent? I'd like to apply for the job.

 

Brent D. Gardner, CLU, ChFC