One of every four American workers faces at least a short-term disability during his or her career, according to a report issued by the Council for Disability Awareness. As experienced financial advisors, Macino Financial works with clients to determine if investing in a disability insurance policy makes sense for them. Unfortunately, we have also seen first-hand the devastating financial consequences that a disability can have on a family. Whether the disability occurs due to an on-the-job accident or a serious illness, decreased income from no longer working a full schedule takes its toll.
Differences Between Social Security and Private Disability Insurance
Gaining approval for social security disability insurance (SSDI) is notoriously difficult. Some people just give up rather than file endless appeals because the process and criteria for approval can be daunting. Even those approved for SSDI only receive a capped monthly payment amount, regardless of how much they earned while working. Private disability insurance, on the other hand, can pay you up to 70 percent of your salary at the time of your disability.
Should You Apply for Short-Term or Long-Term Disability Insurance?
Some people are fortunate to have short-term disability, long-term disability, or both available to them through their employer. If you’re not among them, it’s up to you to research your options and apply for the policy that best meets your needs. Short-term disability provides income protection for up to six months from the initial date of the illness or injury. Long-term disability may cover a portion of your wages for the remainder of your life if necessary. Some disability insurance providers offer benefits such as guaranteed renewal and cost-of-living adjustments as well.
How Do Disability Insurance Providers Calculate Your Premium?
Insurance providers consider several factors when determining how much you pay for coverage each month, including:
- The current state of your health
- Your occupation
- Lifestyle habits that may increase your risk, such as smoking
- The benefits you prefer to receive
Insurance companies underwrite disability policies just as they do for other types of policies. You must honestly disclose any health conditions or risk categories at the time of your application to receive an accurate quote. Macino Financial will help you understand possible limitations to any policy you’re considering, such as exclusions for pre-existing health conditions. No one plans to become disabled, but you can achieve peace of mind with a disability insurance policy.
We want what is best for our clients, including helping you avoid common social security planning mistakes. By taking the time to meet with David or his team at MFS now, you can enjoy your retirement years to the fullest and see for yourself about being a social security millionaire.