How Can Disability Impact Your Finances?

In today's economy, disability insurance is more important than ever. Major accidents or illnesses can dramatically impact a family's ability to cover basic living expenses. Ironically, a major accident or illness may cost very little in medical bills if an individual has health coverage, yet completely undermine his or her standard of living because of lost income.

Many individuals have a vague notion that Workers Compensation or Social Security will provide for them if they became disabled. But eligibility for these programs is narrowly defined and the level of income that is replaced is often limited. And while employees often believe they can rely on personal savings if they can't work due to disability, recent personal savings data shows that Americans continue to live paycheck to paycheck (American Payroll Association, "Getting Paid in America" Survey, 2008).

A 2007 study by The Guardian Life Insurance Company of America, Benefits and Behavior: Spotlight on Group Life and Disability Insurance, revealed widespread misunderstandings about workplace benefits. More than 35 percent of those whose employers offer disability insurance did not know how much coverage they have. Similarly, 27% of respondents who have disability coverage did not know what percentage of their income is protected.

What's more, nearly two-thirds of respondents said they feel they understand the differences between group and individual coverage, but almost half believed that a medical examination is required for group disability coverage. For group disability coverage, as in the case of group life insurance, medical examinations are generally not required. In addition, 24 percent of respondents indicated that they believe group disability insurance is more expensive than individual policies, when, in fact, most group policies are less expensive.

According to an April 2008 survey by Berkshire Life Insurance Company of America, a Guardian subsidiary, 55 percent of employees said they felt their retirement contributions would be most at risk if they lost six to 12 months of income. Mortgage, credit card, and car payments were also cited as primary concerns in the face of financial difficulty.

Disability insurance is available to protect not only your income but your retirement plan contributions as well. Consult with Us link