Too many consumers never ask themselves, “How would I pay my living expenses if I became substantially disabled?” However, tens of thousands of Americans are forced to deal with this reality every year. Disability Income Insurance is designed to replace a portion of your employment income to limit the damaging financial effects that may occur if you become permanently injured due to an accident or a serious illness.
Government policy makers have provided some societal protections, including Workers Compensation, Social Security Disability Insurance, and Veterans Benefits. However, these safeguards are not enough. In addition, these governmental plans have recently come under funding pressures as the fiscal burden has increased. In coming years, the average age of Americans will rise, and less assistance will be available from these public programs. As a result, most individuals will need to rely upon their own planning efforts to meet their financial goals.
Disability Income Insurance Trends
Many events have influenced the development of the Disability Income Insurance market in the United States. The roots of this industry can be traced to the early 19th century as our nation became more affluent and industrialized. At the same time, attitudes began to shift in the general population as they mandated new disability services from the government. The most notable change came in 1935 with the creation of Social Security and later in 1956 with the addition of Social Security Disability Income.
Private insurance markets have also adapted to new consumer attitudes and demands. As living standards increase, this type of coverage is widely believed to be the most important. High-income professionals, heads of household, and business owners recognize the potential loss of income that would occur in the event of a disability. Additionally, consumers realize that existing governmental programs are just not enough to maintain their current living standards.
Disability Income Insurance Options
Typical plan options:
- Employer-sponsored – If keeping affordable monthly premiums is your primary goal, then consider the Employer-sponsored policies. These plans are also referred to as “group” policies because you and your co-workers all have access to them. Although these programs may be the most cost effective to purchase, they usually have very limited benefits. Nevertheless, if going without coverage is your only other choice, having an employer-sponsored plan is better than having no coverage at all.
- Private – If your first priority is to match a plan with your particular needs, then consider a private insurance policy. Sometimes referred to as an individual plan, these policies can be expensive to purchase because they are constructed with benefit-rich coverage. They can be used to supplement other existing policies that have limits or restrictions, or they can provide coverage in a stand-alone design.
In the end, families should analyze their specific needs to determine which policy is right for them. Keep in mind that many employer-sponsored plans may come up short on coverage. It is also wise to shop the open market with an independent agent like Peoples Health Insurance, LLC, who can provide a variety of different plan options. Individual Disability Income Insurance can offer a level of salary replacement that you cannot get through other programs. Although premiums for credible policies can be high, it is risky to put your long-term financial stability in jeopardy.
Disability Income Insurance
Who should consider a Disability Income Insurance policy? Those individuals who are a high-income earning professional, a primary business owner, are self-employed, or have accumulated only a limited amount of income producing assets. Applicants should also keep in mind that quality plans may cost a significant amount of money. Before you will be offered coverage, the insurance carrier will want to closely review your health and understand your current and potential earning power. Note: Certain plans may not be available in all areas.
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