When you have a disability of any kind, your time, energy, and emotions increase as you begin the journey to learn all you can to regain the best quality of life possible, given your unique circumstances. And, if you are married, and/or if you have children, trying to communicate what is happening to you, as well as to your doctors, also becomes a difficult task.
With all this chaos in your life, the last thing you need to worry about is money! What if I can no longer work? How will the invoices be paid?
You may be saying that you don’t need any disability insurance. Consider the following.
disability statistics[1]
The chances that a person will have at least one long-term disability (LTD) lasting three months or more before that person turns 65.
DISABLED: (1999) According to the Disability Management Sourcebook, the number of people between the ages of 17 and 44 with severe disabilities has increased 400 percent in the past 25 years. One in seven people will be disabled for five years or more before reaching age 65.
ODDS, STATISTICS AND DISABILITIES: (1999) The odds of using your homeowners insurance are 1 in 88. The odds of using your auto insurance are 1 in 47. The odds of using your LTC insurance are 2 in 5. One in two women and one in three men will spend some time in a nursing home. (Journal of the American Society of CLU, 1996) More than 12 million older Americans will require some form of long-term care by 2020. (Health Insurance Association of America). 72% of nursing home residents are women. 90% of nursing home residents are over the age of 65. 22% of the disabled population is under 65 years of age. (Puget Sound Life Underwriters Journal 1996). People with functional disabilities between the ages of 18 and 64 account for 40% of Americans in need of long-term care services. (Sale of Life Insurance 1995)
The likelihood of needing LTC (obviously) increases with age. In 1991, 29.2% if those between 45 and 64 years old had a disability; 44.6% between 65 and 74 years old had some kind of disability; 63.7% between the ages of 75 to 84 years. 15.3% and 41.5% respectively had a severe disability. (Employee Benefits Research Institute, 1995) 80% of people with disabilities are cared for at home or in adult day care. 72% of caregivers are family or friends. (Puget Sound Underwriters Journal). The cost of home care can range from $4.25 to over $200 per day, depending on the skill level needed (SF Chronicle, 1995). It will cost more than $213,000 to care for each Alzheimer’s patient, plus other medical expenses, for the remaining five years of their lives. (American Journal of Public Health, 1994). Over 99% of nursing home care is custodial or intermediate care, not specialty care, and is not covered by Medicare or Medicare supplements (Journal of the American Society of CLU’s, 1996).
Reasons why people take STD and LTD
Topping the list of the top 5 causes of short-term disability (STD) time off work in 2001 was (normal) pregnancy, followed by pregnancy complications, injuries (excluding back), back conditions, and digestive/digestive conditions. intestinal. The causes of claims and the percentage received for each cause were as follows:
LTD – 13 percent – Cancer, 12 percent – Pregnancy complications, 11 percent – Back, 9 percent – Cardiovascular, 5 percent – Depression
(2003) each year 12% of the US adult population suffers from a long-term disability. One in seven workers will experience a disability of five years or more before age 65, and if you are now 35, your chances of experiencing a disability of three months or more before age 65 are 50%. If you are 45 years old, the figure is 44%
STDs – 20 percent – Pregnancy (normal), 9 percent – Pregnancy (complications), 9 percent – Injuries (excluding back), 8 percent – Back, 8 percent – Digestive/intestinal
The main sources of disability insurance are STD and LTD. It is important to see if your company offers these insurances. If they do, make sure you’re covered. If they don’t, you can get personal STD and LTD. By visiting the following website, you can learn more about disability insurance.
How much disability insurance is “enough”?
Research shows the following about STD (Short Term Disability) and LTD (Long Term Disability) offered by the employer.
Disability Insurance: (2003) In small private businesses, less than a quarter of workers have short-term disability coverage (22%) and only 13% have long-term disability income insurance, according to the Bureau of Labor Statistics.
Half of workers at large companies (100 or more employees) have short-term disability income insurance (47%) and more than a third have long-term disability coverage (40%).
Disability Coverage (American Council of Insurers 2004) 82% of employees lack adequate coverage.
The Society of Actuaries says that only 2.5% of employees have individual disability coverage (meaning paid by the employee and not the company).
If you’ve already read the other blogs on disability insurance, you know how important it is to know what types of insurance you have and how much each insurance will pay, if and when you need it.
Now, you know how much your STD and LTD will pay each month. The question is, how much SHOULD YOU HAVE?
There are a few easy ways to determine how much is “enough,” and it varies for each family.
1) Sick leave: keep at least 5 days and at best 10 days. This way, you will be able to meet a typical window of time before your ETS kicks in.
2) STD – Most STD policies cover up to 26 weeks. To ensure you have “enough” STD TIME coverage, the weeks must cover the elimination period of your LTD.
3) LTD – Over time, you’ll want your LTD plan to cover you until your retirement age. (Note that not all retirement ages are 65. Retirement ages are increasing; make sure you know your specific retirement age.)
Now, let’s talk about money. To figure out how much money you and your family need, consider the following.
For each month, note the following.
1) OUT Your “must pay” expenses (including but not limited to: house payment, utilities, car and gas, medical expenses, child care, loans, credit cards, etc.)
2) DISABILITY INCOME Add any income that is not yours (ie your spouse’s income) plus what you receive monthly from STD and/or LTD paid by your company. Add to this amount any savings you have and how long it would last.
The gap between disability income and expenses would be the amount of income you might want to offset with a private LTD policy.
WHY NEED DISABILITY INSURANCE BENEFITS?
What are the odds?: (2005) In the next hour 194 people will be injured in car accidents, 57 houses will burn down, 230 people will die, and 1,027 will be disabled.
Here are the latest disability trends that concern you.
* Today, we live harder, work harder and play harder than ever before. As a consequence, there has been a dramatic increase in disabling injuries and illnesses.
* In the past 25 years, the number of severely disabled people ages 17 to 44 has increased 400 percent. While the number of people with protection has also increased, most Americans still have a disability income protection gap.
* This is alarming when you consider that a year from now, only one in 1,200 of you will likely need your fire insurance, generally considered a necessity for homeowners, yet one in eight (8) of you will be sick , injured or delicate.
* The risk of becoming disabled will continue to increase.
Aging is a major factor.
* Because of advanced trauma and cancer care, more people today are surviving illnesses and injuries that were fatal 20 years ago. In 1930, the average life expectancy in the United States was 61 years; today there are 76; and by the year 2050, it will be 82. Today, there are 3.6 million Americans over the age of 65; by 2040, there will be 13.8 million.
* With Americans living longer, age has had and will continue to have a profound impact on disability. According to the National Association of Health Insurers, there are 3.74 disabilities for every 1,000 people ages 45 to 49. This increases almost five times with age, to 15.18 disabilities per 1,000 people aged 60-64.
* In addition, the traditional retirement age is rising and more people are likely to work part-time after retirement, increasing the risk of disability later in life.
Changing the workforce
* More than 10.5 million people are starting their own businesses, consulting or working from home, according to the Bureau of Labor Statistics. And now there are more women than ever working; many families today depend on two incomes. At the beginning of the 20th century, there were only 500,000 married women in the workforce. They represented only 4.5 percent of all married women. Today, there are about 39 million married women who work outside the home (representing 60 percent of all married women), and 17 million of them have children under the age of six.
* With more women working and families relying on two incomes, the need for disability protection has become greater, especially since women are twice as likely to suffer from a disabling illness than men. And with more people working outside their homes and earning substantial incomes, the need for more flexible individualized protection is growing.
Increase in work disabilities
* Over the years, the causes of disabilities have changed in the workplace.
* Today, disabilities due to psychiatric conditions, severe back pain, carpal tunnel syndrome, muscle/tissue disorders, and chronic fatigue syndrome are increasing dramatically. Among the most common long-term disabilities (those lasting more than three years) are circulatory and cardiac conditions, back disorders, psychiatric conditions, general illness, and subjective pain.
* Common short-term disabilities (those lasting less than three years) include normal pregnancies, as well as pregnancies with complications, injuries, musculoskeletal problems, and psychiatric or substance abuse problems.