5 myths about disability insurance

Shortly after releasing the group’s first flyer on how disability insurance can protect your family, Stephen Brobeck, executive director of the Consumer Federation of America, began offering it as a benefit to his employees. “This work [15 years ago] made me realize that I was an irresponsible employer because we don’t offer disability insurance, ”he said, adding,“ We ​​believe this is an important type of program.

Brobeck always tries to get the message across to other employers and employees, many of whom are not even sure whether or not they have this benefit at work. Add it to your checklist for this fall’s open enrollment season when you sort out the benefits you’ll enroll in for next calendar year.

This week, the Consumer Federation of America and Unum, the leading player in long-term disability insurance by market share (16.2%), released a report based on interviews with 407 people who have submitted policy-based claims of their employer group through Unum and who have been or have been on long-term disability for at least six months. “Recipients told us that disability insurance payments played a critical role in protecting their financial and emotional lives,” explains Brobeck.

Long-term disability benefits do not replace your salary; they provide a buffer — usually 60% of your pay. This means that most beneficiaries have to adjust their lifestyle and priorities: among those interviewed for the report, 85% have reduced or completely stopped saving for retirement, and 58% have omitted or delayed some medical care, dental or visual for themselves or their family members.

Here are five myths about disability insurance the report debunks:

I doubt I’ll ever need it. The Social Security Administration estimates that one in four 20-year-olds will become disabled and unable to work before reaching the age of 67. In 2012, more than 650,000 disabled workers received more than $ 9 billion in long-term disability benefits through – sponsored group disability coverage.

Workers’ compensation will cover me. Workers’ compensation replaces lost income if an injury or illness occurs at work, but less than 5% of accidents and disabling illnesses are work-related. Most (90%) of long-term disability benefit claims relate to illnesses, not accidents. Vicki Burhenn, Unum long-term disability recipient, of Lawrence, Indiana, became disabled in 2010 when her chronic obstructive pulmonary disease progressed so that she could no longer work as an office administrator at a mental health facility . “Emotionally, purchasing disability insurance was a godsend knowing that I had the money coming in; it’s like going from drowning to deep breathing, ”she says.

It is a human problem. 60% of Unum long-term disability benefit recipients during the period 2009-2012 were women.

I am too young to care. 41% of Unum long-term disability beneficiaries during the period 2009-2012 were under 50, of whom a third were under 40. Dawn-Michelle Wyzard, a single mom in her 30s, from Clarksville, Indiana, counted on two rounds of disability benefits when she had back surgery and needed time off from work. ‘health data processing administrator. “I could never have financially survived the surgery without disability benefits,” she says, adding, “It helped me not to be stressed because I knew the money would be there.”

I can get coverage on my own. Individual disability insurance, sold through financial advisers, is considerably more expensive than employer-sponsored coverage. Yet only a third of private sector workers have access to employer-sponsored coverage, according to the Bureau of Labor Statistics. Some employers pay 100% of the premiums; some share the cost with the employees; and some offer it as a voluntary benefit, requiring the employee to pay 100% of the premium. Before you go into the personal market to try and buy a better policy, check to see if your employer offers you the option to “buy back” and add additional coverage.

For a policy comparison checklist from the Consumer Federation of America brochure, Click here. (Note: Unum paid $ 40,000 CFA for their report writing work; beneficiaries who were interviewed received a stipend of $ 25.)

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About Antoine L. Cassell

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