What is disability income protection insurance?
How long could you maintain your present living standards without your current income? For almost anyone who works for a living, to be disabled
and to be unable to earn an income, even for a short time, can mean financial stress - and even disaster.
Disability income protection is designed to replace the income lost as a result of disability from
illness or accident by protecting your earnings and your earning potential - perhaps your most valuable asset.
Why should you take out disability income protection insurance?
- To guarantee income continuity in the event of sickness or accident.
- To avoid a company having to fund the continuing salary for a disabled employee longer than may be otherwise desirable.
- To pay the expenses of the business which would continue to be payable in the event of a principal owners disability.
What Are Your Chances For Long-term Income Loss?
Anyone can get sick. Anyone can have an accident. Anyone can be out of work for over three months and lose their income.
In fact, today, because of
impressive progress in the medical field, many lives are saved from premature death caused by accidents or sickness.
Because of this, an increasing number of survivors live on, but with impairments or limitations that mean they can't perform the major duties of their own occupation. In short, they lose their current income but not their life. Their quality of life may diminish.
Statistics show that the probability for long-term disability for at least 90 days before you reach age 65* is high. If such a long term disability does occur it can at minimum have a devastating impact on
your savings, at the very least.
Your Savings May Not Be Enough:
If you're like most people, you have only two months savings in the bank as a protection against emergencies. Yet the average long-term loss of income
due to disability is 5.5 years.*
Even if you save ten percent of your income for ten years, it may take only one year of mortgage payments and meeting other bills to devastate your
savings completely. Now the question is, what will you have to live on for the next four years?
Today, your income is doing a double job for you. It provides for today's necessities and helps you save for tomorrow's hopes.
But if a disabling injury or illness strikes and you have no income, your needs for the basic necessities will continue.
You'll still be obligated to meet the mortgage, car and credit card payments, as well as medical costs not covered by your insurance. But plans for a comfortable retirement, the children's education and a better life may have to be put off, if not discarded altogether.
Commissioners Standard Ordinary Mortality and Disability Tables, 1985 and 1964 (most recent data available).
Facts about Employer Provided Coverage, Workers Compensation and Social Security Disability Benefits:
You may feel that your disability plan provided by your employer will be adequate. Many people find out after they've become disabled that this
is not true. According to the Department of Labor, only 41 percent of companies that employ more than 100 employees provide long-term coverage. *In companies with fewer than 100 employees, only 19 percent
had long-term disability benefits.**Facts you should know about Workers' Compensation and Social Security Disability Benefits.
Workers' compensation benefits vary by state. According to the 1994 Analysis of Workers' Compensation laws, benefits can be as low as $100 per week.
You can find out what your state pays by calling the U.S. Chamber of Commerce. The important thing to remember is that workers' compensation pays for disabilities that occur on the job which occur only 38 percent of
the time (Accident Facts, 1994 Edition).
Social Security disability benefits are difficult to receive because their definition of disability is very restrictive.
In 1993, Social Security received 1.4 million applications for benefits and 55 percent of the applications were denied. (Social Security Bulletin--Annual Statistical Supplement, 1994).