On a regular basis, people come to me and say some version of:
“Do I really need disability insurance? I mean, I have a desk job, and as long as I have my mind, I can always do my work, right? Besides, wouldn’t my employer’s workers’ compensation insurance take care of my basic needs if something happened to me?”
Let’s take those questions one a time.
- “Do I really need disability insurance?”
If you are suddenly unable to work for medical reasons, and you are not (yet) independently wealthy, you need disability insurance to provide income. The bills don’t stop just because you can’t work. And you’ll likely have extra medical bills too.
Did you know the Kaiser Family Foundation found that in 2015 medical bills were the reason a million adults declared bankruptcy?
So, yes to the first question.
- “As long as I have my mind, I can always work, right?”
I’ve heard this line for years. It’s always said by someone who has never been severely ill or injured.
If that’s you, thank God for your good fortune. But to help you get in touch with how being disabled might affect your mind, try this thought experiment: Imagine what would happen to your ability to focus if you took a sledgehammer and gave your index finger a good, hard whack? Or do this: Set your alarm clock for 2 a.m. three days in a row. Then, on minimal sleep, try to solve a really tough work problem.
Pain and fatigue have a way of short-circuiting our best cognitive skills. So, no to the “as long as I have my mind, I can always work” statement. If you are physically disabled, that may be the case, but it is by no means a certainty.
Many think of being disabled as “suffering a freak accident that results in paralysis.” That’s the exception, not the rule.
According to the Council for Disability Awareness, the majority of long-term disabilities are due to common illnesses like cancer, heart attack, or diabetes. Back pain, injuries, and arthritis are also significant causes. This is the stuff of long-term, persistent pain and/or fatigue.
And get this: Statistics tell us that one in five workers—before the age of 65—will miss work for at least a year due to a disability.
- “Wouldn’t my employer’s workers’ compensation insurance take care of me if I were injured?”
About 90% of disabilities are not work-related. Therefore, they are not covered by workers’ compensation. Only a disability caused by or related to your work will be covered by workers’ comp. Just because you “work somewhere” doesn’t mean workers comp will cover you.
Social Security might pay something in the event of your disability. However, according to USA Facts, only 38% of those filing for SSDI benefits are accepted. And only half of those rejected applicants win their appeals.
And even if you do meet the qualifications, the average monthly benefit paid by Social Security is $1,358 a month. You likely need more than that.
Insurance is all about transferring risk away from you by accepting a small loss (the premium) to avoid the potential for a disastrously large loss (the loss of your income for life). When it comes to your ability to earn an income, that’s a great trade to make.
So, yes. The bottom line is you need disability income insurance. Be a careful shopper.
Talk to a qualified agent. Ask a lot of questions.
And to make sure you’re asking ALL the other right questions, email me at bmoore@argentadvisors.com. I’ll send you my free list of “30-Something Questions for People Who are 60-Something.”
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