Most people, if asked, are hard pressed to explain what disability insurance really is. It’s actually pretty simple to define: Disability insurance protects your paycheck.
If you become injured or ill and can’t work, disability insurance pays you a portion of your salary until you can return to work. A Life Happens survey found that most people couldn’t make it a month without their paycheck before financial difficulties would set in. So, it’s easy to see how important disability insurance is.
“That’s all fine and well,” you say, “but here’s why I don’t need it.”
Reason #1: “I’m young and healthy. A disability will never happen to me.”
Truth: You actually have a three in 10 chance of suffering a disability that keeps you out of work for 90 days or more at some point during your career, according to a Life Happens survey. You just don’t know which side of that statistic you’ll be on.
Reason #2: “I could rely on government benefits.”
Truth: Most long-term disabilities are a result of an injury or illness that is not work-related, and so wouldn’t qualify for Workers Compensation. And if you’re counting on Social Security disability benefits, those pay an average of $1,100 a month, which would leave you living right around the poverty level.
Reason #3: “I have disability coverage through work.”
Truth: You may, but it’s more than likely you don’t. Most (70%) private employers don’t offer long-term disability insurance, according to the U.S. Department of Labor.
The bottom line is this: If you work and rely on your paycheck, you need disability insurance.