posted by Winthrop Cashdollar, Executive Director, Product Policy, AHIP
on May 3, 2018
What is the risk of having a disabling illness or injury during your working years and what are the financial ramifications? Armed with the answers below, working Americans can protect their paychecks and their family’s financial security.
Below are a few more answers to uncommonly asked questions regarding the financial risk of disabling illness or injury—and how disability income insurance can help.
Of course, you have heard of Frequently Asked Questions (FAQs). Well—when it comes to disability income protection insurance, there are many questions that are often overlooked or avoided.
While disability income insurance protection is just as important as the insurance against those more top of mind risks such as cancer treatment or a car accident, it is much less well understood. So—every May, organizations make a special effort to get the word out about disability income protection.
Disability income protection insurance—often just referred to as disability insurance—is coverage that pays benefits when illness or injury prevents a covered worker from earning a paycheck. There is short-term coverage and long-term coverage—and coverage that workers get through their employers and coverage that workers buy for themselves.
Disability income benefits allow a disabled worker to keep up with costs of living—such food, housing, utilities, etc.—without selling off assets, borrowing, or asking family members for financial support. For more information about the different kinds of coverage, you can talk to an insurance agent or your employer’s human resources experts.
Yes—the Social Security Administration (SSA) does administer the Social Security Disability Insurance (SSDI) program, and SSDI does provide disability income support for many millions of Americans. However, it can be difficult to qualify for SSDI benefits and it can take a very long time—often more than a year—for the SSA to award benefits.
If you and your family would face financial hardship without a paycheck and no SSDI benefits for a year, you need private disability income protection. Also, SSDI benefits can be very modest; the average SSDI benefit for a disabled worker in March 2018 was $1,197.65. That is $14,371.80 per year. The official federal poverty level for a two-person household in 2018 is $16,240.
Most of us drastically underestimate the chances of work disability. According to the Social Security Administration, just over one in four of the nation’s 20-year-olds will become disabled before reaching age 67.
So—if you don’t have private disability income protection or you are not sure if you have enough protection—start asking questions.