It’s easy to understand the importance of why you need health insurance. Whether you understand how it works, you know that it is important to have.
Homeowners insurance policy same thing right?
We’ve all seen the the horrific commercials with a cactus laying on the roof of a home after a severe monsoon (well those of us who still watch commercials) we make a call and a restoration company comes to repair it (I realize it’s not quite that simple but you get the idea).
In this day in age we as consumers have taken on a new responsibility of making ourselves more educated when it comes to the type of insurance we need or think we need. Insurance online is now easier than ever when it comes to being able to ask questions and even service our own accounts. The best part of this is it also allows us to do it in our pajamas.
So then why is there a glaring hole of either misinformation or lack of information when it comes to Disability Insurance?
Why is it that when it comes to our biggest asset we, as consumers, do very little to educate ourselves as well as purchase such an important policy.
Truth?
No one understands Disability Insurance. It is almost impossible to buy a disability policy online and even harder to do so on the phone without going into an agents office. Why?
Above I mentioned that Disability Insurance is used to protect your biggest asset. Most people think “biggest” as in “size”. This being your home. Your largest investment if you will.
I would tell you your greatest asset is your income.
So what happens if you lost that ability to make money due to sickness or injury? Who will provide for your family? Who would pay the mortgage, the health insurance, and the car insurance on the new Tesla you had to have?
In order for us to peel back the layers I need to make you into that quick digital consumer. The one who purchases things from amazon on their phone, orders delivery (pizza I hope), and believes in the time is money concept. I need to help you get the clearest understanding on what disability insurance is so that way you can decide if protecting your income is a good fit for your family quickly. So let’s hit the basics yes?
The Introductory Guide to Disability Insurance in Arizona
What is Disability Insurance?
According to Ohio National:
Disability Income Insurance will replace a portion of your income if; to a Sickness or Injury, in and of itself, you are not able to perform the Material and Substantial Duties of Your Regular Occupation, and you are not working in any other occupation for wages, compensation or profit, and you satisfy the Regular Care of a Physician provision.
The less fancy definition that makes sense:
If you have a disability policy and you can not work because you are too hurt or too sick, you will STILL receive income.
I have a policy through my employer, do I need another disability policy?
Yes.
- Most employer policies will limit the monthly benefit to 60% or 66% of income with a $5000 monthly cap.
- You do not control the policy, your employer does- this means your employer can choose to cancel the contract or even decrease the monthly benefit
- If you leave the employer there is an almost certain chance you WILL NOT be able to keep the policy
So how do you fix the “gaps”? Having a personal disability policy can help you bridge the gap between the employer policy and what you actually might need in order to cover your monthly expenses.
How much of my income will I still receive and for how long?
Typically there are a few factors that go into determining how much and how long you will receive income replacement for. Here are a few items to consider when making sure you have enough to cover your monthly expenses:
- What is your gross income? This is going to include salaried/earned wages along with regular bonuses. Some carriers do have limitations so this will be a topic to review with your local independent insurance agent to make sure that you are getting the correct amount of coverage for you and your family.
- How long you receive benefits for is essentially up to you. There will be options in the policy that allow you to choose from specific ages (example: 65,67, or even 70) or you might prefer receiving benefits for 2,5, or 10 years. There are going to be different variables that will be available to you and your insurance agent will be able to help you navigate.
I’m young and healthy, do I need disability income protection?
The statistics of disability are high.
According to disabilitycanhappen.org
Roughly 25% of working 20 year olds will experience a disability lasting longer than 34 months in their working years.
In 2016, 10.9 percent of persons ages 21 to 64 were disabled
Let that hit for just a moment.
When you think disability as a consumer your brain probably immediately goes to an older or elderly person (I can’t be the only one who thinks that). Think longevity when you think about disability. How much time is available left in your life for you not to receive income. You have a lot of life to live which means a lot of income to be lost. That means 19,680,675 people in the US have some type of disability not allowing them to earn income regardless of age. Who knew? Disability actually can happen to anyone.
If you lose the ability to work who is going to provide income for the family? Who is going to pay the mortgage, the health insurance? Do you really want to make your spouse go back to or start working? If that happens who’s going to take care of you, and the kids?
“I don’t make a lot of money so I really don’t need and can’t afford disability”
Imagine you are on a game show and you hear a giant buzzer go off indicating your time to complete whatever task at hand is now over. This is the loud buzzer I want you to hear before you knock yourself out of the ring for disability budgeting.
Obligatory Coffee Picture- Thanks Starbucks
So let’s really talk about affordability.
I do not want to be the stereotypical insurance agent that compares the affordability to a Starbucks latte or even use the “you insure your cell phone but you don’t have disability insurance”. Let’s not do that.
Sure I could say things like how long can you really go without a paycheck? How long before the savings runs out- if there is even savings. How long would your family be able to afford your current lifestyle?
There is not a set cost for disability insurance. Much like auto insurance the rate is based on the year, make, and model of well… you essentially. It is based on your existing income, height, weight, medical history, and current job. For example someone who is a 33 year old attorney working in an office is going to have a lot less risk than a 33 year old contractor working in the field. The exposure to injury varies between job positions so pricing of the policy would take that into account.
Disability rates do vary by company so you will want to make sure you are working with an independent insurance broker who has access to multiple companies. The importance in this is that they can take the grunt work out of shopping disability rates that fit your families budget.
What if I never have to use my Disability Insurance?
The point of an insurance product is oddly enough that we hope you never have to use it. After all insurance is kind of just that. You are proactive about a potential “risk” that someday you might have to use this product you have invested in (and trust me as an insurance agent the fact that it is an investment is not lost on me). And in the same breathe, accepting that you might never get to. Disability insurance is one of those products that you hope you never have to use but that if the time should come you will most certainly wish you had it.
I’d like to challenge you to think of disability insurance as more “paycheck insurance”. If you had to put protection in one place it would be more than likely to insure that your paycheck keeps coming in rather than putting it on your 800 dollar new i-phone (I know I promised I wouldn’t, but I couldn’t resist).
So what’s next?
If you have an independent insurance agent that you like to worth with, start there. If not you can click on the form below and we will be more than happy to reach out and get the information put together for you so you have an idea of what disability insurance would not only cost you but cover you for. Further, if you just want some additional information feel free to lean on us to help.