Updated: Jun 10
"Without disability insurance, 50% of Americans said they would use their savings to help them meet their expenses if they were unable to work due to illness or injury" (Life Happens, 2020).
What Is Disability Insurance
Maybe you've heard of Disability Insurance, but you never stopped to think, "what if I become disabled." Facts published by the Social Security Administration Fact Sheet shows more than one in four of today's 20-year-old will become disabled before turning 67. When people typically think of Disabilities, they think of severe injuries that may lead to being parallelized or refined to a wheelchair. They do not think about the smaller injuries that can result in time missed from work and loss of pay.
During the month of May, Dunlap Financial Services is getting involved in educating the public in "Paycheck Protection" by promoting Disability Insurance Awareness Month (DIAM). "Life Happens" sponsor DIAM, Life Happens, a nonprofit organization dedicated to helping Americans take personal financial responsibility through the ownership of life insurance and related products, including disability and long-term care insurance.
If you take notice of your direct and indirect circle of friends and family, you know of someone who has a disability. It is a known fact, 1 and 5 people have some form of disability, and within that 1 and 5, some have yet to sub comb to physical limitations that can disrupt the ability to earn an income. Two types of diseases that affect over 1 million Americans are Parkinson's Disease and ALS. Amyotrophic lateral sclerosis (ALS) and Parkinson's disease are progressive neurodegenerative diseases. Both conditions are in relationship to increasing age; they can create lasting effects, and in many cases, will prevent you from working as you did in earlier years, leading to a drastic loss of income.
What is the likely hood you should be concerned with injury type risks in your home or the workplace? Researchers analyzed information from a national database and looked at six types of unpredictable disability risks:
Mobility (serious difficulty walking or climbing stairs)
Cognition (serious difficulty concentrating, remembering or making decisions)
Hearing (serious difficulty hearing)
Vision (serious difficulty seeing)
Independent living (difficulty doing errands alone)
Self-care (difficulty dressing or bathing)
You Have DI On Your Job
Many people do not consider owning their disability insurance because of their employer's benefits will provide for disability income. Most employer Long-Term Disability Plans cover 60% of your pretax income, and if your employer pays for the plan, the plan benefits may be considered taxable income to the employee.
Employer plans vary and may not replace as much of your income as you might need to maintain your household. The same is true for Social Security. Another area where employer plans or Social Security may fall short of meeting your protection needs is in the Benefit Period or that interval of time during the planned benefit payment period. Some policies provide only up to two years. Your road to recovery could last well beyond two years if you suffer an injury from an accident.
Can I Afford Disability Insurance?
One of the great benefits of purchasing your disability insurance policy is how it pays you when you need the money; you pay with after-tax dollars; therefore, your benefit payments will be tax-free.
Tax-free benefits paying 70 percent of your income comes close to being 100 percent of your take-home pay. Having nearly 100 percent of your take-home pay should help you stay in your home, afford your car payment, maintain the quality of life your wife and children are accustomed to, and ease the stress of not being able to work. (Disability Calculator)
A good question to ask yourself; what happens if I lose 60% of my take-home pay tomorrow?
If you consider what affect your income has on how you live, you may come to realize that the most valuable asset you own is your paycheck, so "protect it" with your personally owned Disability Insurance Policy. (Calculate How Much DI You Need)
Disability Insurance Services. (2013, October 24).Paulette's DI story. YouTube.https://www.youtube.com/watch?v=o8WvOLduKEM&t=6s
U.S. Department of Education and the National Institute on Disability and Rehabilitation