Most of us don’t consider long-term disability a major priority. After all, who wants to think of a time when they can’t work or create income for themselves and their families?
Turn out, it should be more of a priority than you think. Fact of the matter is, almost 75% of Americans live paycheck to paycheck, and don’t have a backup plan if an accident occurs. In addition, one in four Americans that are 20 years old now will become disabled before the age of 67.
Long-term disability insurance seems like a daunting area to delve into. And there are a lot of “myths” that revolve around it (most of which you’ve probably heard from close relatives). We’re here to clear the air on these rumors and give you the hard facts!
Here are the most common long-term disability myths we’re hearing today:
Myth #1: “I don’t need long-term disability coverage.”
The most common myth about long-term disability coverage is that you don’t need it at all. This is far from the truth! Some people think they can rely on workers compensation to cover any expenses in the event of an accident. While this is nice to have, it’s not enough. Your best plan is to have that safety net, along with a comprehensive long-term disability insurance policy that doesn’t rely on a benefit your employer may not offer.
Myth #2: “I can’t get long-term disability if I’m a government employee.”
Government employees typically enroll in retirement plans like the Federal Employees Retirement System (FERS). Participating in these programs means insurance carriers have limitations on how much coverage they can offer. In general, insurance companies equate government employees as having 40-60% of group plans. So while you can purchase supplemental long-term disability insurance along with the FERS benefits, the coverage might not be what you expected.
Myth #3: “My insurer refuses to pay my claim.”
There are cases where someone puts all this money into building a safety net, but the insurer won’t pay out when it comes time to use it. However, it’s not because the insurer is ‘refusing’ to do it. For some illnesses, it’s just harder to get the coverage (like depression and bipolar disorders). As always, our biggest recommendation is to provide as much documentation and medical records as you can.
In other cases, complications can arise depending on the type of coverage you have. These complicated policies are challenging to read, and oftentimes people who have these types of policies don’t understand them, and might accuse the insurer of not paying.
Side note: If you’re looking at insurer reviews online and many of them say the insurer won’t pay a claim — take it with a grain of salt. Like any other business, people typically leave reviews only when they have a bad experience. There are companies that insure millions and millions of people, but reading those few comments might feel like they weigh a lot.
Myth #4: “I’ll need long-term disability insurance until I retire.”
When you purchase a long-term disability policy, you have the option to choose how long your benefit period lasts. It seems logical to select the option to save until retirement, but in some cases, it just adds unnecessary expenses. Typically the longer the benefit period is, the more expensive the policy is. A five year policy is good enough to cover most cases!
Myth #5: “My rates will increase if I sign up for a policy where I can’t cancel.”
In the case of long-term disability insurance, the term “non-cancelable” can be deceiving. What this really means is that your rate is locked in, and won’t increase over the life of the policy. In fact, the risk of a reprice on your policy is very low.
If you’ve heard any other myths on long-term disability insurance and have questions, we’re happy to help!
Disability Associates provides legal representation to disabled individuals who are seeking Social Security Disability and Supplemental Security Income benefits. If this sounds like you, contact us online, visit our FAQ page, or give us a call at (410) 686-2227.