Risk management is the foundation of any solid financial plan. It takes only one sizable risk to threaten your ability to reach your long-term goals. You probably have strategies in place to protect you from a wide range of risks such as medical issues, accidents, home damage and even death.
There may be one risk, though, for which you haven’t prepared. It’s the risk of disability. Many people associate disability with injuries caused in accidents. It’s true that some disabilities are caused by workplace injuries or other accident-related issues. However, the truth is that many different issues, including chronic ailments, serious diseases and much more, can cause disability.
Disability is such a dangerous threat because it can take away your most valuable asset—your ability to generate income. If you are physically unable to work, you may have substantial medical bills, and you also may face your normal everyday expenses without the benefit of a regular paycheck.
Long-term disability insurance is one strategy to minimize the risk. If you become disabled, your long-term disability policy pays you a monthly benefit to cover your expenses. The amount of your benefit depends on the terms of your policy.
Still not convinced you need long-term disability insurance? Below are two reasons why disability insurance could be an appropriate protection strategy for you. If you haven’t opted for disability coverage in the past, now may be the time to reconsider.
Disability is a more likely risk than you think.
If you think disability won’t happen to you, you’re not alone. The Council for Disability Awareness reports that Americans on average believe they have only a 2 percent chance of suffering a disability. The truth is that the average American worker has a 25 percent chance of becoming disabled.1
If you suffer a disability, there’s also a strong likelihood that it could last for an extended period of time. The Council for Disability Awareness finds that the average disability claim lasts for nearly 32 months. Approximately 1 in 8 Americans will suffer a disability in their lifetime that lasts more than five years.1
The figures are clear. While it may not be probable that you will suffer a disability, it is certainly possible. Given the sizable risk associated with disability, it may be wise to develop a protection strategy.
Social Security and employer coverage may not be sufficient to meet your needs.
Even if you recognize the risks associated with disability, you may think you don’t need disability coverage because you are already protected by Social Security and possibly even disability benefits from your employer. It’s true that Social Security offers benefits for disability. And you may qualify for disability benefits through employer-based coverage. However, those benefits may not be sufficient to sustain your lifestyle should you become disabled.
Social Security disability benefits, for instance, are capped at a maximum payment amount. If you are a high earner, you will likely find that Social Security disability payments don’t meet your needs.
Many employer-based disability policies only cover short-term disabilities. That means if your disability lasts longer than a few months, you may not have coverage. Also, some employer-based policies only cover total disability. It’s possible you could become partially disabled and be unable to continue your career, even if you are not totally disabled. An individual long-term disability policy could help fill the gaps in this type of coverage.
Ready to develop your disability protection strategy? Let’s talk about it. Contact us at Intelliplan Financial today. We can help you analyze your needs and create a plan. Let’s connect soon and start the conversation.
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