Most people understand the importance and necessity of life insurance to protect their loved ones in case of their premature death, yet most people also fail to protect their most valuable asset – their ability to earn a living. Here are some of the most common myths about disability insurance that prevent people from protecting that incredibly important asset.
Myth 1: I have enough money saved in case I become disabled.
Long term disability can be devastating to your household and family, and it’s impossible to predict how long it will last. How many years of income do you have set aside: enough for the average disability of 3 years, or even 10 or 20 years? Have you saved enough to account for inflation: rising college costs; housing costs; food, utilities, and fuel costs; etc.? A long term disability can make it impossible to eventually pay your mortgage and other bills, save for college, contribute to your retirement, and achieve the goals you have been working so hard to reach for you and your family.
Myth 2: I am covered by my employer's group plan and do not need personal coverage.
Group disability insurance is a great benefit, but there are aspects that make it less robust than an individually owned plan.
- Group benefits are capped, giving higher compensated employees less protection.
- Group plans typically have basic benefits, cannot be personalized for the individual, and may only cover you if you cannot work in any occupation, not just in your specific occupation.
- Because group disability is not portable, if you leave your job, you lose your benefits.
- Group plans usually do not cover retirement contributions.
A personal plan can cover the benefit gap and have built-in flexibility and benefit increases in case you do lose your group coverage.
(Most small to medium businesses do not offer group disability insurance. While this is a very good benefit to attract and retain great employees, it can also be part of an overall tax savings strategy for the business. Email us for a complimentary evaluation to see if this would be of benefit to your business.)
Myth 3: I am young and in great health, and I can wait to get disability insurance.
The time to get disability insurance is when you are in your best health. A negative change in health, or an increase in age, will cause your premiums to be higher or even prevent you from getting a policy. A disability can happen at any time without warning, and when it does happen, it’s too late to get insurance.
Myth 4: Most disabilities are caused by accidents, and I am a careful person.
Accidents are actually the cause of less than 10% of disability cases. Most disabilities are due to illness. Arthritis and other musculoskeletal problems account for about a third of all disability cases. Diabetes, depression, cancer, heart disease, and back pain are all common causes of disability claims.
Myth 5: Becoming disabled is very unlikely to happen to me.
According to the Council for Disability Awareness, if you are in your 20s the odds of you becoming disabled before you retire are 1 in 4, with the average disability lasting 34.6 months. The further you get out of your 20s, the odds of becoming disabled get even higher.
We are here to help. Our mission in the Wealth Management business is to provide you with the clarity, confidence, and commitment to achieve your financial goals. You will benefit from a new-found understanding of how much is possible. Email us for a complimentary consultation.