The Importance of Disability Insurance
Eric Vinores
Peak Benefits Group

The importance of planning appropriately for all of life’s challenges can’t be over stated.Through our daily lives it is easy to get lost in our day to day routines and not consider the unexpected obstacles that we may face; though this does not make the challenges any less
likely of presenting themselves at the most unexpected moments.

Although most weekends come and go seemingly too quickly, leaving us the struggles of the work week by Monday morning, most Americans enjoy working and the tasks and achievements it presents. Many Americans say they would continue working even if they were independently wealthy and did not require the income to cover their daily expenses. The difficulty comes when a working individual becomes injured or sick, preventing them the ability to work. Most people do not have the luxury of being independently wealthy and would face a great deal of struggle if income were to stop. The challenges that families face when income stops aren’t just limited to the daily bills that continue to come in. Families also face challenges of lifestyle and the ability to
keep children consistent in their homes, schooling or after school activities. A simple unexpected illness or injury can immediately cause struggles in the ability to continue their work and earn a living.

The chances of becoming Disabled for longer than a three-month period is much greater than you may realize. According to the Social Security Administration, 1 in 5 Americans live with a disability. More than 1 in 4 twenty-year olds become Disabled before reaching retirement age according to the Council for Disability Awareness, with a greater number of individuals facing short term leave of absence from work to recover from a temporary illness or accident.

During the time of a medical illness or accident that prevents you from being able to work, your focus should be on your recovery and overall wellbeing, not on the worry of what bill will come in next. Most Americans only have a limited savings to cover bills for a short-term period if they are unable to work. If you are married, you might be able to rely on a Spouses income to cover expenses although many families rely on their total income to fully support bills and family costs.

Accidents happen not only on the job but also at home, and illness can strike anyone at any time. Most Americans carry Health Insurance either through their employer, their Spouses employer or the individual marketplace; however, medical insurance is only designed to pay the providers for their treatments. This type of insurance does not protect your income. Some employers provide family medical leave to those employees on maternity leave or dealing with other family medical emergencies; however these tend to be short term benefits and are not
common or long term.

Income during a time of illness, injury or Disability can be difficult to come by. Social Security does offer benefits to those that qualify based on the severity and extent of the illness impacting your ability to work. Many benefits through Social Security Disability require a 24-month waiting
period prior to eligibility for benefits.

Depending on the cause of your illness or injury you may be eligible to file for a claim through your Employers workers comp plan; however, workers comp is only designed to cover claims due to the result of accidents caused while on the worksite. Workers comp will not cover claims
through an at home accident or illness. Private insurance is available to be purchased either through an employer sponsored benefits
package, or individually through private insurance companies. Employer sponsored plans can only be purchased if offered through your employer. These private policies are offered as either a Short-Term or Long-Term Disability benefit plan.

Short Term plans are designed to cover a limited period of time, normally a few months up to a full year. These plans replace a percentage of your income for this period of time to cover the income that would have been lost. The normal waiting period for these benefits to begin paying a claim is between 0 days up to a week, although these vary between policy types. In certain policy instances, employer sponsored plans will provide coverage for family medical leave and maternity benefits.

Long Term plans are designed to cover a period of time, either after a Short-Term plan expires, or simply after you have waited enough months (traditionally 3 months). These plans are normally designed to pay benefits to policy holders for a number of years, sometimes up to full
retirement age. Any private insurance policy is designed to only cover a portion of your income, normally 60%-75%. These benefits can be taxed on many different levels based on how policies are acquired and paid for. In general, a policy that is purchased by an individual and paid for by that person,
received claims payments non taxed. If a policy is paid for by an Employer, then generally the employee would need to pay tax on the benefits received. Finding coverage and protecting your family from the unexpected challenges life throws at us can be a daunting task. Be sure to do your research and speak with a professional about any specifics of coverage choices as they can vary between providers. Be sure to check with your employer if Disability coverages are available through your companies benefit package. Normally an employer sponsored plan offers limited medical underwriting or guaranteed benefit limits to participate in if enrolled during the annual enrollment period. These can be the simplest option if available but be sure to understand the specifics of the plan you elect.

If your employer does not offer a disability benefit option, they are available through the individual marketplace. Be sure to speak with a health insurance agent/broker about the options available and check multiple carriers. Each company prices and underwrites specific occupations and pre-existing medical conditions differently, so there is no ‘one-size fits all’ plan for people. Most brokers will work with you to not only help you understand these coverages, but also compare options to ensure you are receiving a good value for your personalized benefits and not solely looking at one carrier. Your family is worth planning for and protecting to ensure continuity and stability through your working years. Protect your family through many of life’s obstacles and be sure that you are planning with a purpose!

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