Disability insurance can play a crucial role in keeping you financially afloat if a disabling illness or injury strikes. And it's not just those with hazardous jobs who need to worry about becoming disabled: Illness actually keeps many more people out of work than accidents.
Most people don't actually know what disability insurance is. So if you want to know more, read on about the following six misconceptions people have regarding disability insurance and the risk of becoming disabled:
The Common Thought: I am in good health; I won't become disabled
The Truth: According to statistics, nearly one in five Americans will become disabled for a year or more before the age of 65. An illness or accident that keeps one out of work can be very costly from medical bills, prescriptions and other unforeseen expenses.
The Common Thought: I'm not in a dangerous line of work|
The Truth: Regardless of your occupation, if you have a job, chances are you need disability insurance. Many people assume disabilities are caused by accidents. However, the National Institute on Disability and Rehabilitation Research reports that only 13% of disabilities stem from injury. The vast majority of disabilities are the result of illness.
The Common Thought: Worker's compensation will cover me if I become disabled so I don't need disability insurance
The Truth: Worker's compensation only covers you if you are disabled as a result of your job and many worker compensation programs follow strict guidelines and pay only limited benefits. Having disability insurance will ensure you are financially stable even if you become disabled outside of work.
The Common Thought: The benefits I can get through Social Security eliminates my need for disability insurance
The Truth: Don't count on it. It is extremely difficult to qualify for Social Security disability benefits. According to the Social Security Administration, in 2003 roughly 70% of those who applied were denied. If you do qualify, it takes five months or longer for benefits to kick in and, on average, pays out just over $800 a month.
The Common Thought: I don't need individual disability insurance coverage, because I'm covered through work.
The Truth: Know the specifics of what type of coverage your employer provides. Talk to your company's benefits or human resources office to find out if the policy covers short or long-term disabilities and the benefit level paid out for claims. If the benefit coverage offered through your company wouldn't be enough to help you make ends meet in the event of a disability, many companies offer the opportunity to increase coverage through automatic payroll deductions. You can also supplement your company coverage with an individual policy.
The Common Thought: I'm too young to worry about disability insurance
The Truth: According to the National Association of Insurance Commissioners, people in their 30's are three times more likely to become disabled than die. You may have enough money saved to pay the bills for a few months, but what will cover you down the road when the bills are piling up and you're not receiving a paycheck?
