April 5, 2015
Experienced Social Security disability attorney Tracey Pate discusses five common misconceptions regarding disability insurance.
Will disability insurance allow you to maintain your current lifestyle if you’re disabled? How likely is it that you’ll need insurance in the first place? Unum, a leading long-term player in the disability insurance market recently released a report based on interviews with 407 individuals. All of the participants submitted claims through their employer group policies with Unum and have been on long-term disability for at least six months. The results disprove some common misconceptions about disability insurance.
Contrary to popular belief, long-term disability does not replace your salary. It provides a buffer, usually about 60% of your normal earnings. This means that most recipients must adjust their lifestyle and rethink their priorities. Of those interviewed for this report, 85% cut back or completely stopped saving for retirement and 58% skipped or delayed medical, dental or vision care for themselves and/or family members.
Understanding the following five myths will give you a better understanding of the Social Security Administration (SSA) system and help you to avoid common – and costly – mistakes.
- Worker’s compensation will cover me. Worker’s compensation coverage replaces lost income from an injury or illness that occurs on the job. However, fewer than 5% of disabling incidents are truly work-related. In fact, ninety percent of long-term disability claims are for illnesses, not accidents, and proving that an illness is associated with employment can be difficult.
- I’ll probably never need it. The SSA estimates that one in four 20-year-olds will become disabled and unable to work before the age of 67. In 2012, more than 650,000 disabled workers received over $9 billion in long-term disability benefits through employer-sponsored group Unum disability coverage.
- I’m a woman … this won’t affect me. In a period from 2009-2012, 60% of Unum long-term disability recipients were women.
- I can get coverage on my own. Individual disability insurance sold through financial advisors is considerably more expensive than employer-sponsored coverage. According to the Bureau of Labor Statistics, only one-third of private industry workers have access to employer-sponsored coverage. Some employers pay 100% of the premiums, some share the cost with employees and some offer it as a voluntary employee benefit. Before you go into the individual market, see if your employer offers the option to “buy up” and add additional coverage.
- I’m too young to think about it. During a period from 2009-2012, 41% of Unum long-term disability recipients were younger than 50 and a third of those individuals were under 40. It’s crucial to plan for the worst at any age.
By understanding these five common myths, you’ll have clearer judgement when it comes to the need for disability insurance. Although these five items are among the most common misconceptions, there are many other mistakes to be avoided. For more information, contact experienced disability attorney Tracey Pate at Disability Associates in Maryland today.