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Disability insurance

Car crashes. Heart attacks. Random acts of violence. Back injuries. Cancer. These are all frightening possibilities that can change your life in an instant and dramatically impact your ability to work. If you are lucky, you have sick leave and maybe even short-term disability from your employer.

But what if you need a year of intensive physical therapy, or you need to enter a clinical trial for experimental treatment, or you can't go back to your stress-filled job? Everyone understands that at some point in time they will die and therefore they need life insurance to cover their debts, assist their spouse with expenses, and educate their children. Yet when it comes to protecting income from a disability, which is much more common than dying prematurely, most people think they're not in a high-risk occupation, so they don't need the coverage. The facts, however, tell a different story. The odds of men dying before age 65 are about one in five, while the odds of being unable to work due to sickness or injury for more than 90 days is one in three.

This is where long-term disability insurance comes in, to protect your most valuable asset -- your ability to earn an income. What could be more important as part of your financial plan than to insure an income stream in the event of long-term sickness or disability?

Why bother?
Disability insurance never seems to be that important. After all, you are healthy and you don't work at a dangerous job. Or do you? Taking into account all occupations, more than half of all 25-year olds will sustain a disability lasting 90 days or more by the time they reach retirement age. These odds are even higher if you have a dangerous occupation, but still 4% (4 out of every 100 people) if you are an office worker. Even this is a pretty high percentage when you consider that your family could face financial ruin. According to the Department of Housing and Urban Development, half of all mortgage foreclosures are the result of a disabling injury or illness. This statistic alone should make you carefully consider disability coverage.

Many employers offer coverage
The easiest way to get long-term disability insurance is through your employer. In fact, you may have it and not know it. If you've never looked at the specifics of your company's disability insurance benefit, you should do that. It's important to know what is covered so you can decide if you want to look into buying additional coverage.

Employer coverage will vary by state and your company's internal policies. You may find that the long-term coverage is generous and completely underwritten by the company, although these days it's almost a certainty that you are paying all or a percentage of the cost. Still, employer group programs are usually about one third the expense of obtaining your own disability insurance. However, if your employer pays for your insurance, the income while you are disabled will be taxed. You may, therefore, need even more coverage. Worse yet, if you change jobs, your new employer may not offer this coverage, and you may no longer be healthy enough to qualify for an individual policy.

What to do now
It's time now to make sure that you have disability insurance and that you have the correct amount of coverage.

Step One - Locate Your Policy

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