Let’s get to the point. If you have a job and depend on that income to pay for all of life’s necessities, you need disability insurance. Sounds straightforward, right? But when only about a third of working Americans have this important coverage, there is definitely room for clearing up some misconceptions.
Here are 10 facts about disability insurance that may surprise you. We’ve made them “tweetable” so you can share: Simply click on the fact you’d like to tweet and the tweet will be generated for you. And be sure to follow us on Twitter at @LIFE_Foundation.
Think you’re smarter than your paycheck? Well, try your luck with the Paycheck Pop Quiz. There are five short videos, each with a question. If you get all five answers right, leave a comment and let us know and you’ll get a prize from the LIFE Foundation (scouts honor on this!).
So there I was, hanging out at the bar having dinner last Tuesday. Next to me was this guy with a flight of wine glasses. Out of curiosity, I had to ask, “What’s your favorite? He gave a long look at the three glasses and then said, “the pinot from Washington State. It’s light, smooth and silky.” We traded names and continued to chat for a while as we passed the night away. A while later, Monica, our server, asked if we were finished and we both said it was time to call it a night. Monica tallied up our bills and presented us our respective bills.
Both of us reached for our wallet. Right then, it dawned on me so I asked, “Hey, Tom, what’s the most important card in your wallet?” Tom looked into his wallet and pulled out a picture of his kids and smiled at me. “Tom, I get that—they’re important in your life! Which card though?”
Tom fingered through several credit cards and landed on his VISA card. He started to pull it out and then saw the one. “John, it’s my medical insurance card.”
“Yeah, that’s what I thought as well until …”
Tom quickly chimed in, “Until what?”
I paused and then said, “… until I learned that my medical insurance card paid everybody but me. You see, when I had my water skiing accident and was confined to a hospital bed, my medical card paid the hospital and doctors to put me back together, but it never, ever paid me my salary. That’s when I learned that the most important card to have in my wallet is my paycheck protection card—the card that shows I have disability insurance. That’s what paid me an income when I was unable to work.”
I’m sharing this story because I think Tom’s answer might be the same for most people, including you. So I want to challenge you to think about what would happen if you became sick or injured and unable to work? How long would you be able to make ends meet without your paycheck? In my case, the accident left me unable to earn an income for an extended period of time. I would have been in dire financial straits without the income that my disability insurance policy provided me. That’s why you need to protect your paycheck with disability insurance. Learn more at www.protectyourpaycheck.org.
Yesterday The Wall Street Journal published the article “Should You Purchase Long-Term Care Insurance?” Actually, it was a debate between two people. Mark Meiners, a professor of health administration and policy at George Mason University, argued in favor of long-term-care insurance. Prescott Cole, a senior staff attorney at California Advocates for Nursing Home Reform, argued against. I feel compelled to respond because of Mr. Cole’s misrepresentation of the facts about long-term care insurance.
Much of Mr. Cole’s argument seems based on the belief that most care is still done in nursing homes. However, the facts are that over 85% of care is now received outside of nursing homes, making much of his argument moot. Nursing homes are one of the myriad care options available to those with long-term care insurance, but most claimants now prefer care in settings ranging from the comfort of their own home, to adult day care, to assisted living facilities and more.
Instead of asking “Should You Purchase Long-Term Care Insurance?” a better question is “What Is Your Long Term Care Plan?” because that’s what this argument really boils down to. It’s not the risk of experiencing a long-term care event; it’s about the consequences if it does happen. Insurance can’t prevent the risk, but it can help your caregivers manage the consequences.
Let’s face it, when you need care, someone will provide that care, most likely a family member. So, it becomes a matter of how providing your care will affect their health, finances and emotional state. Numerous studies have shown that family caregivers experience a higher level of physical fatigue and are more prone to illnesses. They experience almost double the normal rate of depression as they try to juggle work, their own family and your care. Family caregivers also experience financial difficulties as they work less, lose job opportunities, and pay out of pocket for some of the expenses of your care. Also, for a spouse, any money they spend on your care now is that much less that they can rely on for their own future needs. An insurance plan might not completely eliminate any of these stresses on caregivers, but it may reduce them to a more manageable level.
Mr. Cole also claims that in “the game” of long-term care insurance, you are playing with a “stacked deck.” What he fails to realize is that some of the insurance options available can stack the deck in your favor. For example, the shared-care option with many policies allows two people to share the risk by linking their benefits together. If one exhausts their policy benefit, they can use some or all of the spouse’s policy. Another option is to select a policy that links long-term care benefits with an annuity or life insurance policy: a win-win proposition. If you ever need long-term care, the policy will pay for the care, leveraging your premiums to many times your initial investment. If you never need care, your heirs will receive a death benefit from your plan. Linked benefit policies eliminate the “if I never use it, I lose it” argument.
As medical advances help us live longer, many of us will need some form of long-term care. The time to plan for how you will handle that eventuality is while you are younger, are in good health and have options. Like any kind of long-term strategy, you should first educate yourself on the options available to you, and then work with an experienced professional to make an informed decision. That way, whether you choose to insure with traditional long-term care insurance or one of the linked benefit policies, or you self-insure using your own money, you will go into that decision knowing all the pros and cons of your decision, and know how it will affect not just your care, but the lives of those around you.
During a dinner party a few months ago, I learned that a mutual friend (and father of four) had been diagnosed with a rare form of leukemia. Thinking of his kids ranging in age from newborn to 5, I immediately wondered aloud if he had life insurance. None of us at dinner knew for sure.
Ever since that night, I’ve found myself trying to craft a simple message about life insurance that could penetrate the over-stimulated consciousness of my generation—I’m 34, a mother of two, and stuck somewhere between Gen X and Y. I Facebook, I tweet and I live on my iPhone. I work full time and handle most of the finances for our household. I buy through Groupon and consult with my neighbor, Jill, before any major purchase.
When it comes to life insurance, I think it all comes down to protection. My friends and I are all obsessed with protecting our kids from every possible threat, be it germ or Internet predator. And we think about it all day, every day. Hand sanitizer, flu shots, helmets, even car seats until the kids weigh 80 lbs.! Yet, we don’t buy life insurance. There seems to be a disconnect here somewhere.
In an effort to raise awareness, I created this one-minute video, envisioned as a sort of public service announcement about the value of life insurance. Watch and let me know if it resonates with you.
75 percent of us would worry about $ if we became disabled, but only 31 percent of workers have disability insurance http://bit.ly/sJIkv4
