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Disability Insurance- Protect Your Most Important Asset

We use insurance to protect a variety of assets, from cars to homes to jewelry. But many people forget to insure their most important asset – the ability to work and earn a living. It probably doesn’t show up on your calendar, but May is Disability Insurance Awareness Month.

In a recent Social Security fact sheet states “Just over 1 in 4 of today’s 20 year-olds will become disabled before reaching age 67.” And if disease or injury renders you disabled early in your young working life, the lost wages can be much more than a house or a sedan.

According to Health Affairs, disability causes nearly 50 percent of all mortgage foreclosures.

The National Underwriter Life and Health states at age 42, you are four times more likely to become seriously disabled than to die during your working years.

The good news is that if you don't have insurance and get hurt or ill, you aren't doomed. The Social Security Administration provides some form of disability benefits as a safety net. But it's hardly enough to live comfortably. As of March 2013, the average disability payment was less than $1,130 per month. Furthermore, there is a complex eligibility process, and benefits apply to Americans with a medical condition that prevents them from working for at least 12 months.

For many families, the possibility of losing just a few months' income or living on half the paycheck just isn't an option. If this sounds like you, it may make sense to look for some form of disability insurance to protect yourself and your family.

Here are your options if you're looking at disability insurance:

• Group Disability Plans. The most common kind of disability insurance, group plans are typically offered through your employer.

• Individual Disability Plans. If your employer doesn't offer a group plan or you don't like what you're offered at the office, you can shop around as an individual. But keep in mind that, without a group, your price is based on your unique situation and needs. Like health insurance, that means individual plans are generally cheaper if you're young and healthy and costly if you're old with heart trouble.

• Supplemental Disability Plans. If you have a basic employer-sponsored disability plan or if you're content to rely on Social Security for any long-term disability claim, then supplemental disability coverage is a decent and affordable bridge. As the name implies, it is an additional layer of coverage to help pay for medical or living expenses that may not be covered by a long-term plan.

The bottom line is that, with any financial product, your personal needs will dictate what kind of coverage is best for you. The government will provide a basic safety net should tragedy strike, and obviously some disability coverage is better than none.

However, don't fool yourself into thinking that just because you're covered that you will be able to pay all your bills should a medical emergency strike. But don’t wait too long to take action in this area. You can’t predict the future, but you should still prepare for the unexpected.