Disability Facts & Statistics:
Here are a few surprising statistics* about your risk of disability:
- Most disabilities occur off the job estimated 95%
- A worker age 40 has a 43% probability of incurring a 90+ day disability before age 65
- 1 in 4 20 year olds will become disabled before retirement
- Four leading causes of disability: 1) Skeletal injury, 2) cancer, 3) cardio/respiratory disease, and 4) Mental illness
- The majority of those disabled for 90 days are still disabled two years later
- Medical problems contribute to a majority of all bankruptcies
Banks report that a majority of home foreclosures are traceable to a catastrophic medical event among people who originally had health insurance! It was the loss of income and not the occurrence of medical expense that ultimately caused their financial world to collapse. The probability that a disability that would trigger financial collapse during an average person's working career is about 1 in 5. Various reports break this down into smaller segments for analysis but the overall message for financial planning purposes remains the same: the risk of disability is one of the largest threats we face in achieving our financial goals.
For starter coverage we suggest adding your fixed major bills together (mortgage, child support, car payment, etc.) These essential fixed bills that would quickly become serious financial problems without a paycheck should be the target of your disability coverage.
Individuals frequently want to insure the amount of their medical insurance premium contribution. Insurers rarely offer this benefit as part of a standard health plan. Medical insurance only works if it is in force while you need care most urgently. If the medical insurance lapses while you out of work and unable to pay the premium, then the entire foundation of your health care security is undermined.
The price of coverage is based on age, sex, occupation, and location. Applicants must typically be under age 64. When controlling cost of insurance is a top priority we suggest using a 2 year benefit period with a 90 day waiting period between the disability and the start of benefits.
*For more detail on these statistics and a list of sources, download the 20 page disability income insurance brochure from UnitedHealthOne.
What is Short Term Disability (STD)?
Short-term disability (STD) insurance pays a percentage of your salary if you become temporarily disabled, meaning that you are not able to work for a short period of time due to sickness or injury.
If you have an accident or illness and are unable to work, short-term disability benefits begin will begin after a waiting period. This is the period of time from the date of accident or illness onset to the start of benefit payments. The waiting period choices are 0, 7, 14, 30, 60 or 90 days. You decide the waiting period at the time of application.
The shorter the waiting period you choose for your policy, the higher the cost of the policy. Employers may offer sick days, personal days and vacation days which may be used to cover the period of time prior to the start of your benefit payments.
STD policies provide you with benefits amounts between 40 to 65 percent of your pre-disability base salary. At time of application, you will decide on the amount of benefit amount for your policy.
Benefit payments can last for 3, 6, 12 or 24 months. Typically, you match the benefit period to the start of your long term disability plan benefits.
What is Long Term Disability (LTD)?
This is the core Individual Income Protection product: it is designed to replace a portion of your earned income if you become too sick or hurt to work. Long term disability insurance is the foundation of any sound financial plan.
You may apply for coverage if you are between the ages of 18 and 61.
Your initial premium will be based on your issue age, tobacco status, gender, occupation, benefit period, elimination period, monthly benefit amount and any optional coverage selected.
You are guaranteed the right to continue your coverage until age 67. During that time, we cannot cancel your policy as long as you pay the required premium when it is due. After age 67, you may continue your coverage to age 75 if you continue to work full time and pay the necessary premium when due.
The elimination period is the number of days you must be totally disabled, proportionately disabled, or any combination of the two before we will begin to pay you benefits. The available elimination periods are: 60, 90, 180 or 365 days.
The benefit period is the maximum length of time total disability benefits, proportionate disability benefits, or any combination of these benefits are payable. The available benefit periods are 2, 5 and 10 years and to age 67. Benefit periods may be restricted for some issue ages and some occupations.
*All benefit periods may not be available in every state.