If you’re underestimating your need for disability insurance, you’re not alone. Turns out, only 10% of individuals can accurately estimate their chance of disability. No one anticipates having a severe injury or illness, so it’s easy for this type of insurance to get thrown to the back burner. In this article, we’ll explain misconceptions around disability insurance, and best practices for looking into it.
But first, why should disability insurance be more prevalent than it is?
- Over 1 in 4 of today’s 20-year-olds will become disabled before they retire.
- About 91 percent of disabilities are caused by illnesses.
- Only 31% of the workforce is covered by employer provided disability insurance.
These few facts alone prove a few things:
- The chances of having a disability at a young age are much higher than expected.
- We most often associate disability with injury, when in fact it’s the opposite.
- Employer insurance isn’t always enough to get you by.
If you’re considering looking into disability insurance, there are a few best practices to follow.
#1: Know how disability is defined.
Disability policies can have different meanings, “own occupation” and “any occupation.” It’s important to know how each of them is defined, as it directly impacts your ability to receive benefits.
- “Own occupation” policies pay disability benefits to those who can’t perform the duties of their own occupation. For example, if you’re an attorney and your disability keeps you from performing duties at that job that’s considered “own occupation,” even if you’re well enough that you choose to take another job outside your field.
- “Any occupation” policies are a little more strict. They only pay benefits if you are unable to work in any “gainful occupation.” So, if you’re an attorney, your benefits could be denied if you were able to work as a cashier instead.
#2: Know where you’re covered.
There are two distinct groups in which you can fall under when it comes to disability insurance. They are as follows:
- Coverage from an employer group plan. If you fall into this category, consider yourself lucky! While terms vary, benefits of 50% to 60% of pay are typical for an employer-provided LT disability policy. This amount of coverage usually suffices, however some people choose to add on additional insurance policies as well to supplement. The insurance carrier would take your current coverage in consideration to assure you do not make more money (after-tax) as a disabled person than if you were still on the job.
- Self-employed (not covered by group plan). With these plans, you are not covered under an employer group plan, and must seek out insurance from other organizations on your own. This type of policy tends to be more expensive because it does not require someone to stay out of the workforce completely when disabled.
#3: Speak with a lawyer if you need help.
If you’ve been having difficulty filing a disability claim and/or would like someone to help you throughout the process, we highly recommend speaking with a disability lawyer. Your chances of winning a case and completing the process properly are greatly improved when you have a lawyer by your side.
If you live in the Baltimore, MD area, Disability Associates would love to help! Contact us online today or give us a call at (410) 686-2227.