3 Reasons You Think You Don’t Need Disability Insurance (But Actually Do)

Most people, if asked, are hard pressed to explain what disability insurance really is. It’s actually pretty simple to define: Disability insurance protects your paycheck.

If you become injured or ill and can’t work, disability insurance pays you a portion of your salary until you can return to work. A Life Happens survey found that most people couldn’t make it a month without their paycheck before financial difficulties would set in. So, it’s easy to see how important disability insurance is.

“That’s all fine and well,” you say, “but here’s why I don’t need it.”

Reason #1: “I’m young and healthy. A disability will never happen to me.”

Truth: You actually have a three in 10 chance of suffering a disability that keeps you out of work for 90 days or more at some point during your career, according to a Life Happens survey. You just don’t know which side of that statistic you’ll be on.

Reason #2: “I could rely on government benefits.”

Truth: Most long-term disabilities are a result of an injury or illness that is not work-related, and so wouldn’t qualify for Workers Compensation. And if you’re counting on Social Security disability benefits, those pay an average of $1,100 a month, which would leave you living right around the poverty level.

Reason #3: “I have disability coverage through work.”

Truth: You may, but it’s more than likely you don’t. Most (70%) private employers don’t offer long-term disability insurance, according to the U.S. Department of Labor.

The bottom line is this: If you work and rely on your paycheck, you need disability insurance.

Next steps

What you need to do is:

1. Find out what disability insurance coverage you have at work (short-term, long-term, both or none at all). Your HR department can help you out with that.

2. Make sure you know much coverage you actually need by using this easy online Disability Insurance Needs Calculator. (Keep in mind: Your employer may give you coverage as a benefit, but that doesn’t mean it’s enough!)

3. Get an individual disability insurance policy to fill in any gaps you might have to make sure you’re taken care of if something were to happen to you. An insurance agent will sit down with you for free and help you find a policy that fits your needs and your budget.

  1. The sad truth is it is often extremely difficult to be approved if not impossible for the disability insurance as the insurance companies will stall, ask for medical records going back in some cases to birth and will deny the claim if they can find anything pre-existing anywhere in your medical history that might be an underlying cause of your debilitating condition.
    I talked to an attorney after I was denied and he said 95% of disability claims are denied and most short term and long term plans do not allow any appeals.

  2. None of this is true for group disability. I have worked in insurance my whole working career. About 80 – 85% of LTD claims are approved. This has been true across all companies I have worked for, and I have worked for Met, The Hartford, Unum and Lincoln Financial. That is not to say that your claim won’t be investigated later and terminated, but if a company denied 95 % of its claims, the regulators would shut them down. Also group policies are governed by ERISA, which requires that you have 180 days to appeal a denial. You have been given bad information. Don’t be discouraged.

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