Yesterday, many financial bloggers took part in a blog movement concerning life insurance. This movement was spearheaded by Jeff Rose over at Good Financial Cents. Many of the blogs I read took part in this movement and it was great to read all of the different takes on life insurance. The overriding themes by most bloggers were:
- Over 35 million households do not have life insurance
- Term life insurance was the choice of coverage by most bloggers
- Most bloggers agreed that life insurance is not needed if you don’t have a family/someone depending on your income
The 35 million households without life insurance is a staggering number. Sadly, many do not realize the impact their untimely death would have on the household they left behind. While I applaud the movements mission to make people aware of the importance of life insurance, one bloggers post brought another topic to mind that I feel needs to be addressed.
Do I Need Disability Insurance?
Daisy, over at When Life Gives You Lemons, pointed out that she is a healthy mid-20’s year old, who doesn’t involve herself with smoking, drugs or reckless abandon that would increase her chances of an untimely death. While I am happy that she doesn’t involve herself with those activities, she has something else to concern herself with other than passing away: becoming disabled.
According to The Council for Disability Awareness:
- 25% of today’s 20 year olds will become disabled before they retire
- Over 36 million Americans (12% of the population) are disabled
- There are 2.5 million disabled workers in their 20s, 30s and 40s receiving Social Security Disability Benefits as of December 2010
A typical female, age 35, 5’4″ tall, 125 pounds, non-smoker, who works mostly an office job, with some outdoor physical responsibilities, and who leads a healthy lifestyle has the following risks:
- A 24% chance of becoming disabled for 3 months or longer during her working career
- A 38% chance that the disability would last 5 years or longer
- An average disability for someone like her lasting 82 months
A typical male, age 35, 5’10″ tall, 170 pounds, non-smoker, who works an office job, with some outdoor physical responsibilities, and who leads a healthy lifestyle has the following risks:
- A 21% chance of becoming disabled for 3 months or longer during his working career
- A 38% chance that the disability would last 5 years or longer
- An average disability for someone like him lasting 82 months
If the person smokes or is overweight, the odds of disability are even higher.
While it is important to make sure you have life insurance, you should also make it a point to have disability insurance in place should you become disabled. As the above statistics point out, you have a much greater chance of ending up disabled than you do of meeting your untimely passing.
Think about this for a minute: you become disabled and can no longer work. How are you going to survive financially? You will most likely get a monthly Social Security Disability check, but then what? Not only will you have to cover the living expenses you had before your accident, but now there could be other costs including: surgeries, prescriptions, doctors appointments, making your home and car accessible depending upon your injury, etc. Where will the money come from for these expenses?
Now I know what many are probably thinking. You’ll deal with this another day, or Social Security Disability will be there for me. Or, most likely you’ll get hurt at work, meaning your worker’s compensation will cover you. Hopefully, these stats open your eyes:
- 65% of initial Social Security Disability claims were denied in 2009
- The average benefit paid is $1,065 per month, with 52% of people receiving LESS than that
- 95% of disabling accidents are NOT WORK RELATED, meaning worker’s compensation will not cover you
It’s not a fun topic to discuss, but it is one that people need to be made aware of. I urge you to look into getting disability insurance. I am just like most of you – I don’t have any disability coverage. But these numbers are enough to make me take action. It doesn’t cost a lot to insure yourself either. You can expect to pay 1-3% of your annual income for a policy that would pay you $2,500 month. For a typical male, the monthly cost of a $2,500 monthly benefit is $45. Of course, rates vary depending on many factors.
Other Potential Sources of Income
Have you become disabled and you are being denied your benefits? Consider filing a class action lawsuit to receive the benefits you deserve. A class action is a lawsuit filed on behalf of an entire group of consumers who have suffered injury as the result of a corporation’s actions. Some examples of a class action suit include a suit filed against a loan company for misleading borrowers or even a car manufacturer not recalling vehicles after a part on their cars is not functioning as it should.
Here is what happens many times taking the malfunctioning car part noted from above: You get in an accident and are denied a disability claim for whatever reason the insurance company comes up with. Unbeknownst to you, others have also gotten into an accident due to the same malfunctioning part and have been denied their claim as well.
As more accidents come to light, it is realized that the malfunctioning part is the reason why you were in an accident. Since your disability was due to the negligence of others, you should look into hiring class action lawyers to see if there is potential there for a case. In these situations, class action lawyers are there to protect consumers when insurance companies deny them a disability claim. The class action lawsuit allows for these people to be compensated for their injuries.
Understand though, that many times these cases can take a decent period of time to reach a verdict, so you will still have to find ways to support yourself while out of work. The good news is that if you are able to win the case, you will have money to support your future self.
I’m hoping that you can see the benefit of “spending” that amount of money each month. In my eyes, it’s a win-win. You either have coverage and are able to survive financially should disability occur, regardless if it is a short term disability or a long tern one, or you get lucky and don’t have to take advantage of the coverage. While you are getting this coverage, it’s a good idea to review your estate documents as well, including your will.
Readers, do you have disability coverage? Do these numbers make you think about getting coverage?