If the primary earner in your family was unable to work for a substantial amount of time, how would you pay the bills?
It’s easy to forget that there’s more to insurance than covering potential healthcare costs, and this is where disability insurance comes in. Unfortunately, this type of insurance comes with its own set of myths and lore, so let’s set to work at separating fact from fiction.
Myth #1: Disability insurance covers only work-related injuries
False. Disability claims mostly stem from illness. Disability insurance exists to cover a percentage of your salary in the event of an accident or illness, work-related or not. It could be in the case of a car accident, pneumonia, cancer, or a household accident. An array of unforeseen life circumstances can put you out of commission.
Myth #2: If I can’t work, government programs, like Workers’ Compensation, will cover me.
False. Workers’ compensation only compensates those who have sustained a work-related injury, and according to Guardian Life report, only nine percent of long-term disabilities are work-related.
Programs like Social Security Disability Insurance (SSDI) include a stringent process of determining who is qualified as completely disabled, and many do not make the cut. In addition, the payout may not meet your and your family’s needs. As of December 2023, the average monthly SSDI benefit was $1,537.13.
Myth #3: I don’t need disability insurance because I have a great health insurance plan.
False. Disability insurance meets an entirely different need. Instead of helping out with medical costs, disability insurance is in place to keep your family afloat in case of prolonged illness or accident. It does this by paying a percentage of your salary so that, while your health insurance helps with the medical bills, disability insurance can help with the mortgage, your kids’ educational costs, your electric bill, etc.
Myth #4: Disability insurance is included in my group health plan, so I’m covered.
True and False. Group plans or employee-sponsored group coverage may certainly include disability coverage. However, it’s important to be educated about your disability coverage within a group plan. For instance, group policies often cover catastrophic events only, and will not follow you to another job, as an individual policy would.
Myth #5: It’s doubtful that I would ever need disability insurance.
False. According to the Social Security Administration, 1 in 4 people will become disabled before retirement.
Myth #6: I should wait to think about getting disability insurance.
False. The cost of disability insurance is determined by your health, age, and income. Not only would it be advisable to purchase this product at your youngest and healthiest, but if you wait until you become disabled, you may become uninsurable.
Myth #7: Disability insurance does not pay out immediately and only for a limited amount of time.
True. There is a waiting period, as dictated by your particular policy, that will determine what’s called your “elimination period”. The elimination period is 30-60 days before your disability insurance kicks in. Further, your disability policy will only pay out for a finite amount of time. (Typically, 1-2 years for a short-term policy or 2-5 years for a long-term policy.)
Your capacity to work and earn a living may be the single most important asset you own, so it’s important to protect it. Ideally, none of us will face any kind of adversity or interruption to our ability to work, but life has a tendency to happen despite our best laid plans.
It’s important to consider how to protect yourself before an unplanned health event occurs. Disability insurance, whether long-term or short-term, is one of the best ways to do it!
