Disability Insurance
It won’t happen to me.
As a financial advisor, I’ve heard this phrase many times. When we haven’t experienced something before, it’s difficult to imagine it happening. It’s why children who have never been burned persist in reaching for hot stoves. It’s why teenagers often choose not to buckle their seatbelts. And it’s why adults who’ve never been in a major accident or suffered a serious illness are often financially unprepared should one occur.
Unfortunately, humans are rarely good at evaluating personal risk. But as a financial advisor, it’s my job to give you the facts, and the fact is this:
Nearly one in five Americans lives with some type of disability, and many will have acquired it before retirement.1
When this happens, the consequences to a person’s retirement savings can be devastating.
(You’re already thinking it, aren’t you? “It won’t happen to me. I’m never going to end up blind, or deaf, or in a wheelchair.”)
But think about this:
- Arthritis
- Back pain
- Heart trouble
- Depression
- Diabetes
- Carpal tunnel
None of those sound so far-fetched, do they? You see, disabilities come in many forms. From a financial standpoint, a disability can be any physical or mental condition that prevents or limits you from working.
Aside from the lost income from not working – or not working as much – disabilities can also be very costly to treat. Even something as simple and common as chronic back pain can have a profound effect on your finances…and your retirement.
As a financial advisor, it’s also my job to help you protect your money and stay on track to reaching your financial goals. Guarding against a future disability – and all the financial consequences that can bring – is a key part of doing that.
One possible solution is disability insurance.
Now, before we go any further, let me stop and say, “I know.” You don’t want to hear about insurance. You certainly don’t want to be sold insurance.
I get it.
But forget about the word “insurance” for a moment and think instead about the word “insure.” To insure means “to secure or protect against something.” As boring or unpleasant as it may be, insurance is a way to protect and secure your financial future. Imagine you’d never heard of insurance before. If I were to ask, “Do you want to protect your finances?”, what would you say? You’d say, “Of course.”
Insurance is one of the best ways to do that.
Disability insurance is designed to protect your income against the risk of disability. There are several types of disability insurance, each with different costs and benefits. For example, some types specialize in short-term disabilities; others are more for the long-term. Regardless, all disability insurance is meant to replace or cover at least a portion of your income should your ability to work be affected.
Now, disability insurance isn’t necessarily for everyone. But consider this:2
- Nearly one in five Americans lives with some type of disability.
- In the U.S., a disabling injury occurs every 1 second.
- Most disabilities aren’t caused by freak accidents, but by common occurrences like back injuries and heart disease. (Still thinking, “It won’t happen to me”?)
- An illness or accident will keep 1 in 5 workers out of work for at least a year before age 65.
- Unexpected illnesses and injuries cause 350,000 personal bankruptcies every year.
But that doesn’t mean you should just run out and buy disability insurance.
I write all this not to convince you to buy, but to plan. It might be time to review your current insurance coverage, income, and financial goals. Are there any areas that need additional protection? If not, great! But if so, let’s discover those now rather than later. Because later may be too late.
1 “Nearly 1 in 5 People Have a Disability in the U.S.,” United States Census Bureau, July 25, 2012. https://www.census.gov/newsroom/releases/archives/miscellaneous/cb12-134.html
2 “Disability Statistics and Facts,” National Treasury Employees Union, March 12, 2009. https://web.archive.org/web/20110727133227/http://nteu-chapter78.org/documents/member_benefits/Disability%20Statistics.pdf
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