Disability Insurance

Why you should have Disability Insurance

Your ability to earn a living is what keeps you and your family living the lifestyle you have worked so hard to create. So, why not take the extra step of protecting your income with disability insurance? If you are ill or injured, your ability to earn an income might be severely impacted. Missing more than a few weeks of work could force you to fall behind on your family’s mortgage, car insurance, health insurance, your children’s education, and your savings for retirement. Imagine what the impact of being unable to work for months or years would have on your life.

What you should know about disability insurance:

• What is disability insurance? In the most basic terms, disability insurance is protection for your income.
• Who needs disability insurance? If you depend on earned income to pay your bills, disability insurance is something that you can’t afford to be without.
• What is the likelihood of needing disability benefits? The U.S. Social Security Administration reports that the odds of a 20-year-old worker becoming disabled prior to retirement are three out of ten (SSA Publication No. 05-10029).
• How does disability insurance differ from life insurance? While life insurance is an important part of providing long-term financial protection for your loved ones, it pays benefits only following death. Stop and ask yourself what will happen to your family if you lose the ability to work. People often live with disabilities for decades. That’s why disability insurance is so important.

Some Quick Facts

According to the 2016 Disability Statistics Annual Report published by the Institute on Disability at the University of New Hampshire:

• The percentage of people with disabilities in the US population rose from 11.9% in 2010 to 12.6% in 2013, 2014, and 2015.
• Rates of disability increase with age. In the US in 2015, less than 1.0% of the under 5 years old population had a disability. For those ages 5-17, the rate was 5.4%. For ages 18-64, the rate was 10.5%. For people ages 65 and older, 35.4% had a disability.
• In 2015, of the US population with disabilities, over half (51.1%) were people in the working ages of 18-64, while 41.2% were 65 and older. Disability in children and youth accounted for only 7.2% (ages 5-17) and 0.4% (under 5 years old).
• For most families, the mortgage payment is their single largest expense. Without a source of income following a disability, making that payment often becomes impossible.
• By the time Social Security disability payments are approved (if ever), foreclosure proceedings could already be in process.
• According to the National Safety Council (2004), home loan foreclosures are 16 times more likely to result from a disability than from death.
• Per a 1998 study conducted by the U.S. Housing and Home Finance Agency, nearly half of all foreclosures are the result of a disability.
• The best way to protect your ability to continue to pay your mortgage following a disability is to find room for long term disability insurance premiums in your budget today. Doing so will be much easier than finding a way to pay your mortgage if you lose your ability to earn an income.

These alarming statistics alone should be reason enough for all breadwinners to sufficiently protect their ability to earn. With disability insurance, you can replace up to 60% of your regular income if, due to illness or injury, you’re unable to work. Be responsible for your finances and get a free quote today!

Working with the Professionals at Intramark Insurance

You can compare disability insurance quotes from the top insurance companies by using the easy quote form to the right of this page. Our team works for you, not the insurance companies, so you can rest assured that we will always provide you with the best options for your unique situation.

Long-Term Disability vs. Short-Term Disability Insurance

As you begin searching for a policy, you’ll run across long-term disability insurance and short-term disability insurance. A short-term policy can supply you with up to 60% of your normal income for a few months or up to a year. This type of policy might come in handy if you’re suffering from a temporary illness or injury. However, most short-term policies are issued for large employer groups.

A long-term disability insurance policy, on the other hand, can replace up to 60% of your income until age 65 or 67. For this reason,  the premiums for these types of policies are generally more expensive than short-term disability insurance policies. Is the peace of mind of knowing that you will still be able to earn a living if you become terminally ill or permanently disabled worth the cost? We think so.

Own-Occupation Disability Insurance Vs. Any-Occupation Disability Insurance

Another choice that you’ll have to make is between own-occupation disability insurance and any-occupation disability insurance. Own-occupation disability insurance protects your ability to earn a living if, due to illness or injury, you are unable to perform the usual and customary duties of your own occupation. If you’re a physician or dentist, a minor injury could put your once-promising career on hold indefinitely.

With own-occupation disability insurance, you can expect to replace up to 60% of your current income (tax-free in most cases), even if you’re still healthy enough to work another, lower-paying job. This is not true of any-occupation disability insurance. With this type of policy, you will only receive benefits if you are too sick or injured to work in any occupation.

For example, a surgeon may not be considered disabled under an any-occupation disability policy if he or she is still able to teach medicine rather than performing life-saving surgery on patients.

Individual Versus Group Disability Insurance

Are you wondering if you should opt for an individual long term disability policy rather than going with the group disability coverage available through your place of employment? Many people decide to go with a group plan without investigating other options available to them. Each situation is unique, but there are many circumstances under which individual disability coverage is better than a group plan, in terms of both costs and benefits.

Disability Benefits and Taxes

Are you wondering if benefits paid to you as disability benefits are taxable? If you’ve heard conflicting stories about disability insurance and taxes, that’s because in some cases disability benefits are taxable, and in other cases they are not. When comparing different disability insurance options, benefit taxation can be an important factor in evaluating disability insurance cost.

When are disability insurance benefits taxable?

Benefits paid to a disabled individual through an employer paid group disability insurance plan are taxable as ordinary income. This means that you’ll owe income taxes on disability benefits you receive via group disability insurance at the same rate you would have to pay if you earned the money as wages or salary.

When are disability benefits not taxable?

Disability insurance benefits paid to insured individuals through an individual disability insurance plan that you pay yourself (after tax not through your employer) are not subject to income tax. When you receive disability benefits under an individual disability policy, you’ll be able to utilize all the funds you receive toward covering your daily living expenses rather than having to set aside a portion for income taxes.

Factors That Affect Disability Insurance Premiums

Wondering how much you’ll have to pay for a long term disability insurance premiums? Because several different factors impact the cost of disability insurance, the best way to find out what your premiums will be is to request disability insurance quotes online. That way, you’ll be able to compare what several different insurers have to offer, so you can make the best policy selection for your particular situation.

Variables That Impact Disability Insurance Cost Include:

• Age

• Occupation
• Employment status (self-employed versus employee)
• Health history
• Earned income
• Smoking status

Social Security Disability is not the Answer

Many workers in America today are under the assumption that if they become disabled, they can receive Social Security Disability benefits and continue with their lifestyle. Not true!

In many states, it can take a year or longer to get a Social Security Disability claim approved, and only about 35 percent of the claims filed are actually approved.

In order be considered totally disabled for social security purposes, you must meet three criteria:

1. The individual is unable to perform the work required by his or her previous occupation.
2. The disabled person cannot perform a different type of work as a result of his or her medical condition.
3. The person’s disability is expected to either a) last for a year or more or b) result in death.

Even if you are approved for benefits, there’s a good chance that the amount of money you receive won’t be sufficient to take care of your ongoing living expenses. The average social security benefit is less than 750 per month. Since it’s likely that you’ll need more money to support yourself and your family in the event you become disabled, it’s certainly wise to invest in your own individual disability insurance.

Consider Portability

When your only disability insurance policy is an employer-sponsored plan, you can find yourself without this important form of income protection if you quit or lose your job. Individual disability policies are not tied to your place of employment, which means that you can keep coverage in place regardless of job changes.

Disability and Foreclosure Statistics:

• For most families, the mortgage payment is their single largest expense. Without a source of income following a disability, making that payment often becomes impossible.
• By the time Social Security disability payments are approved (if ever), foreclosure proceedings could already be in process.
• According to the National Safety Council (2004), home loan foreclosures are 16 times more likely to result from a disability than from death.
• Per a 1998 study conducted by the U.S. Housing and Home Finance Agency, nearly half of all foreclosures are the result of a disability.
• The best way to protect your ability to continue to pay your mortgage following a disability is to find room for long term disability insurance premiums in your budget today. Doing so will be much easier than finding a way to pay your mortgage if you lose your ability to earn an income.