Disability Insurance

Disability insurance insures your biggest asset - the ability to earn a paycheck.  It replaces part of your income when you become disabled due to an injury or covered illness.  The bottom line is this...if you or your family depend on your income to pay bills, you need to protect your paycheck.

Consider these statistics:

  • The average long-term disability absence lasts 2.5 years.1
  • Over 70% of working Americans do not have enough savings to meet short-term emergencies.2
  • While many people think that disabilities are typically caused by freak accidents, the majority of long-term absences are due to back injuries and illnesses, such as cancer and heart disease.3
  • Close to 90% of disabling accidents and illnesses are not work related.4
  • Unexpected illnesses and injuries cause 350,000 personal bankruptcies each year.5
  • According to a 2005 study, disability causes nearly 50% of all mortgage foreclosures, only 2% are caused by death.6
  • Three in 10 workers entering the work force today will become disabled before retiring.7
  • Over 6.8 million workers are receiving Social Security Disability benefits, almost half are under age 50.8

 

1. Commissioner’s Individual Disability Table A

2. National Investment Watch Survey, A.G. Edwards Inc. 2004

3. Council for Disability Awareness, Long-Term Disability Claims Review, 2007

4. National Safety Council, Injury Facts 2008 Ed.

5. "Illness and Injury as Contributors to Bankruptcy," Health Affairs, February 2, 2005

6. Health Affairs, The Policy Journal of the Health Sphere, 2 February 2005

7. Social Security Administration, Fact Sheet January 31, 2007

8. Social Security Administration, Fact Sheet January 31, 2007

 
How to Choose a Plan...

A living benefit. We recommend a disability benefit of not less than 60% of your gross salary.  Resist the temptation to purchase less just to save a few dollars each month.

A long term benefit. The key to a disability plan is long term protection. If you became sick or injured and were unable to go back to work, it is important that you have a disability policy that will protect you until you reach at least age 65. Beware disability policies that offer limited benefit durations...anything less than 5-years could spell financial ruin.

Understand Pre-existing Conditions. Most disability insurance policies have a pre-existing condition clause that limits the amount of coverage available for medical conditions that are present prior to the effective date of coverage. Make sure you understand the pre-existing clause before you choose or change your disability plan. 

Short term benefits. Most short term disabilities are best handled through sick leave. Why is sick leave the best option? Because it continues to provide your salary and your benefits. For those without a supply of sick leave days, one should consider adding a short term plan to your long term protection. A short term plan simply bridges the gap between the end of your sick leave and the beginning of your long term disability protection.

Beware “add-on” Features. Disability insurance is there to provide protection if you are disabled and unable to earn a living. Some companies selling to educators will add features to a disability plan that are unrelated to disability in the hopes that you will buy their plan. Our advice to you is to read the description of these features carefully. Many of these features will relate to doctor’s visits or hospitalization, and most often you will find that qualifying for the extra payment is difficult.

 

 

2008 Collateral Educator Services / 1.866.322.2244 / info@servingeducators.com aeabenefits.com   email