Why Disability Insurance? Learn the Risks.

Are you financially ready to manage your mortgage, food and other critical expenses if you lose your ability to work? A personal injury from an accident or illness could prohibit you from earning wages. Without the right disability insurance coverage, your family could end up deep in debt or, even worse, filing for bankruptcy. dBusinessNews :: Daily Business News published an article on April 26, 2010 that discussed disablity and the implications on bankruptcy in the U.S.

Know the Facts:

• 62 percent of all personal bankruptcies filed in the U.S. in 2007 were due to the inability to pay for medical expenses.
• 71 percent of all employees in the U.S. live paycheck to paycheck, without adequate savings to protect them in the event of a financial blow such as becoming disabled.
• Less than half of the worker disability claims filed with Social Security are approved.
• National Safety Council's Injury Facts 2008 report stated that only 10 percent of disabling accidents and illnesses are work related, meaning 90 percent are not covered by Workers Compensation.
• Companies carry group, long-term disability insurance for their employees, but many may only cover a portion of a worker's income should they become disabled.

According to Arkady Milgram, financial strategist and special care planner with Walker Financial Partners, "Disability coverage is complicated and often not thoroughly understood by corporate Human Resources departments or the employees. For instance, any disability payouts from an employer's policy are taxable, while distributions from individual policies are tax free, as long as you pay the premiums. This can be significant if you need the income"(quoted from dBusinessNews :: Daily Business News article).

Solutions to Disability Insurance Concerns:

• Make sure you really understand your disability insurance, and that you read the fine print.
• If the insurance provided by your company only covers a portion of what you'll need, be sure to budget/save for an emergency.
• Talk to a financial adviser or your bank representative about the best options for investing those savings. You'll want to avoid placing it where you might be penalized if you withdraw the funds before a given amount of time has passed.
• Consider supplemental insurance that could cover the gap.
• If you are meeting with an independent insurance broker, make sure they take the time to review your existing plan before they sell you anything else. While it's important to be covered, every dollar counts and you don't want to end up with more insurance than you really need.

Source: http://www.accidents.com/news/link/protecting-your-biggest-assetyour-ability-to-earn/

All content on Accidents.com is for informational purposes only and is NOT intended as legal or medical advice. Please seek advice from a professional on any related topics.

Tags:  Bankruptcy · Debt Consolidation · Insurance · Long Term Disability Insurance · Workers Compensation