Considering that once you reach age 30, you’re more likely to become disable than die before you turn age 60. While almost everyone understands the importance of life insurance most often disability insurance is overlook. A disability could mean big changes in your expenses. When an injury or illness prevents you from working your income reduces or stops and your expenses usually increase. During a disability your expenses; food, housing, insurance, cars, child care and utilities continue. Plus new expenses related to your disability begin; medical care not covered by insurance, in-home care, cobra insurance premiums, home modifications and insurance co-payments.
Consider these statistics:
: One in seven workers will become disabled for five years or more before retirement.
: 1 in 4 of today’s 20 year olds will become disable before they retire. Sourced from Social Security Basic Facts October 2015.
: The average long term disability time missed from work lasts 2.5 years.
: 50% of all mortgage forecloses disability was a major factor due to loss of income.
When you are not able to work due to an injury or medical condition long term disability insurance replaces your income. If you think Social Security will replace your income here are some statistics to consider:
: Only 38% of the 2.3 million disable workers who applied for Social Security benefits in 2008 were approved.
: The average monthly Social Security Disability benefit paid for those approved was $1,064.
You protect your home and car, but what about what you relay on the most-your income? You should buy and carry long term disability your entire life. Projected cumulative income for a 35 year old with an annual salary of $75,000 assuming an annual increase of 5% is a total income to age 65 of $4,983,000. The correct amount of insurance to buy is usually 60-70% of your income. 62% percent of all Americans don’t have an emergency fund. A sound financial plan would include fully funding an emergency fund that would fill in the gaps if you’re unable to work short-term. Your emergency fund should cover three to six months of expenses, because long term disability policies have elimination periods of 30-180 before benefits are paid for a claim. Generally the longer the elimination period the lower the premium. You can’t predict the future, but you can make the decision today to protect yourself and your family against the risk of tomorrow.
We will compare several top rated disability insurance companies and with different elimination periods to find a policy to fit your budget. The average premium for a white collared professional is only 1.5 to 2 % of your income. Contact us today and we can answer all of questions about long term disability insurance.