According to a recent U.S. Census Bureau study, an estimated 56.7 million people (which is around 20 percent of our population) reported a disability. So if nearly 1 in 5 people in the U.S. suffers from a disability each year, then we could assume that disability insurance in not only an important asset for companies to have but something everyone should enroll in.
What is Disability Insurance
Disability Insurance provides protection against the potential loss of income due to suffering a disability. Group long-term disability is part of most employee packages, but it is oftentimes the most overlooked and in some cases may not be adequate enough to cover 100% of your expenses when you need it. Most people will fall victim to some sort of disability in their career. Even if it isn’t permanent, it still may cause a financial burden.
Some common disabilities that most plans cover are disorders and conditions affecting the following:
- Special senses and speech
- Respiratory system
- Cardiovascular system
- Digestive system
- Genitourinary disorders (chronic kidney disease)
- Hematological disorders
- Skin disorders
- Neurological disorders
- Mental disorders
- Malignant neoplastic diseases
- Immune disorders
What’s Typical?
Most companies offer group long term disability insurance that will cover 50-60% of your base income after 90 days time. Coverage is usually capped off around $10,000 of total monthly coverage. Some employers may also offer supplemental coverage which allows their employees to purchase additional percentages of coverage.
Is it Enough?
The answer is almost always no. There are many factors to consider and also many loop holes in disability coverage. For instance, most plans only cover income on a pre-tax basis, so your benefits would be subject to high income taxes. In addition, there are many disabilities that this coverage will not cover, most commonly partial disabilities and residual disabilities. Most plans also do not cover living adjustments, which is why supplemental coverage is usually needed. In many cases, a recipient will only receive a small portion of their actual income and it could be as low or lower than 40%.
Getting the Coverage I can count on
Even if you have a group disability plan through your employer you should consider additional coverage to help you avoid a financial crisis in the event of a disability. Freedom Insurance can review your current employers plan and give you real life scenarios to consider. We’ll help you to evaluate your options. If you have gaps or if your plan isn’t up to your standards, our agents can help you find a supplemental policy or a new, more comprehensive one.
