Disability Income

Who Needs Personal Disability Insurance:
Ask yourself the following questions. If you answered yes to any of them then you mostly likely need it:

1. Do you depend on your income to survive financially? Unless you are independently wealthy, then more than likely the answer is yes. Otherwise, how else would you pay the bills if your income stopped? Another way to answer this question honestly for yourself is, am I able to take a 6 month unpaid vacation tomorrow. That’s really what experiencing a disability could be like, out of nowhere having an extended period of time with no more income coming in because you are too sick or injured to work. One can only hope that should you become disabled it is only for 6 months, the reality of a long term disability could be much worse.

2. Do you have a family to support? How will you take care of them if you don’t have an income? Will your spouse be able to work or will he/she have to take care of you? Does he/she have the ability to replace your income? This is the number one reason people end up purchasing an individual disability insurance policy. We know because we ask every single person who has ever requested a disability insurance quote from our office during the last decade. Many of us require two income to support our current lifestyle, and sometimes it is necessary to purchase coverage for both the husband and wife to make sure that dual income is protected.

3. Would you be able to survive financially if you were not able to work for an extended period of time? Again, unless you are financially independent, the answer is no. Many people live paycheck to paycheck. Imagine if that stopped for any length of time! Most disabilities tend to be short term in nature, meaning that they resolve themselves one way or another inside of a year. However the average is much longer than a year, because if it does not resolve inside of a year one can expect it to last much longer than one year.

4. Do you have a mortgage? For most people, this is their biggest monthly expense. In fact, the average household spends 34.1% of their income on housing!1Not having a disability insurance policy puts your entire financial situation at risk, including the home you and your family live in. Just having a policy helps insure that regardless of sickness or injury, you will likely be able to make sure your family has a roof over their head should something happen.

5. Do you have car payments? The average US consumer spends approximately $8,758 annually on transportation! Are you one of them? Even if your cars are paid off, you still have the expenses of maintenance and gas, not to mention the insurance.2

6. Do you like to feel financially secure? How long would you be able to survive financially without a paycheck? Regardless of how you answer this question, how long could you really go without affecting your lifestyle without a paycheck? Most people, regardless of their income tend to spend a large portion of their income on their own lifestyle. It is just amazing how expenses rise along with income. Even people making a half a million or more a year need disability insurance just as much as people earning $50,000 a year. If you have more expenses, usually that just means you are going to need more personal disability insurance.

7. Do you like to take vacations? I can tell you that one of the first things to go when finances are tight is discretionary spending, such as vacations. If you are at home, not able to work and stressed out, how will you be able to take that much needed vacation? During a claim, people are always telling me how they didn’t expect the amount of new bills that come along with being disabled. You will typically have more medical bills, and depending on the disability may have to hire more people to attend to things you used to do on your own like mowing the lawn, shopping, and more.

8. Do you like to help others financially? Maybe you have family members that need your financial assistance. Or maybe you just like helping those less fortunate. If you can’t take care of your own financial needs, how will you be able to help them?
9. Do you have credit card bills? According to NerdWallet.com, the average credit card debt for indebted households in the U.S. is $14,517 (as of March, 2012). Are you one of them?

10. Do you pay alimony or child support? Unfortunately with so many marriages failing, there are many people responsible for alimony and child support. If you are too sick to work, how are you possibly going to make sure you are able to meet this financial obligation?

11. Does your employer offer group disability insurance coverage? Even if they do, it is more than likely not enough to cover your monthly expenses. Most group plans pay 60% of your base pay. Since most group policies are paid for by your employer, the benefits you would receive are taxable.

12. Are you eligible for Social Security? If so, you may qualify for Social Security disability benefits. This would not be enough income in most cases either. In fact, according to the Social Security Administration website, the average Social Security disability payment is $1,129.61 per month. Now I don’t know your exact situation, but I doubt many people could survive financially on this small monthly stipend.

13. Are your finances short of your retirement goals? If so, how would you possible be able to save for retirement? In the end, unless you are working for the fun of it, and not because you need the money you really do need disability insurance. The only people who don’t need it are people with enough money to retire comfortably today.

I have asked many people what they think their biggest asset is. Most mention their house or retirement accounts. In reality, for most people, their biggest asset is their ability to work and earn an income.

So who really needs disability insurance? The simple answer is almost everyone. Whether you are single or married, if you have children or not.