Adapted for PowerPoint by Megan Maller

Basics of Disability Insurance

What is Disability Insurance?

Disability insurance allows you to replace a major portion of your income if you ever become so sick or injured that you cannot do your job for a prolonged period of time.

You can think of Disability Insurance as “Paycheck Protection”. Its purpose is to ensure that if the unexpected should happen, you will still receive a monthly income.

Will I need Disability Insurance

The simple answer is “yes.” None of us want to think about the possibility of suffering from a disability, but the risk is real. What are the odds?

An illness or accident will keep 1 in 5 workers out of work for at least a year before the age of 65

Your chance of missing at least 90 days of work due to a disability is just under 1 in 3

The risk of disability is greater than the risk of premature death

Risk of Disability vs. Premature Death

What would you do?If you suddenly couldn’t work, how long do you

think you could pay all your bills? Could your savings cover your expenses for more than 60 days? That is assuming your disability is short term. What if it isn’t?

Research conducted by the America’s Health Insurance Plan indicates that most Americans cannot afford to miss more than two months of work without having to borrow money. However, it wouldn’t be feasible to get approved for a loan without an income. What then?

Other income optionsThere are three other sources of income that

may or may not be available to you depending on your situation.Employer-provided Disability Insurance:

Some employers provide plans to cover up to 60% of an employees expenses up to a specified monthly maximum. It is, of course, not portable if you are forced to leave the company.

Government Disability Insurance More than 60 percent of the 2.1 million people who applied for Social

Security Disability Insurance (SSDI) were denied in 2005.2 Even if you were approved for this government program, SSDI benefits alone may still leave you below the Federal Poverty Level.

Workers’ Compensation A good option, but the vast majority of disabling accidents or illnesses

are not work-related, and therefore not covered by workers’ compensation

How much does it cost?You would choose a disability insurance policy

tailored to you, your unique situation and the amount of protection that’s right for you. The monthly premium for a disability insurance policy varies based on several factors: Type of policy selected (short-term disability insurance or long-term disability

insurance) Type of disability covered – accident only or accident and sickness policy Optional protection you wish to add

for example: critical illness benefit, hospital confinement benefit, and future insurability option, to name a few.

Elimination Period you select Benefit Period you select Your age at time of purchase Your occupation and income Medical underwriting

Of course, every person and situation is unique. It is important to work with a licensed insurance agent who can help you determine the right amount of coverage in a policy that will fit your budget.