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List: Posted: 12/16/10
Most workers in the United States do not have disability insurance, even though actuarial tables show that anyone and everyone is at significant risk for being disabled for more than three months through accident or injury at some point in their career. It’s the cheapest insurance to purchase, yet nobody thinks that they will end up disabled, so most skip it. But what, exactly, are you missing out on?
Disability insurance is often confused with worker’s compensation. Very few accidents happen on the job, but when they do, worker’s comp kicks in and con provide a large cash settlement if (and only if) the accident was the company's fault. Disability insurance, on the other hand, is for anyone who becomes ill because of cancer, serious mental health problems, a skiing accident, or just about any other kind of disease or accident off the job. In this case, nobody is at fault so if you qualify you will receive smaller monthly payments to replace lost income while you are out of work.
Social Security Disability has so many prerequisites for payments that many people fail to qualify, and if they are eligible, the payments are barely enough to get by on.... but you can get by, which is the whole point of Disability insurance. Most Social Security disability benefits are below the federal poverty line, so the reduced income can take some getting used to. Disability insurance allows workers and their families to get by, but is not usually enough for the affected worker to live the lifestyle that they were accustomed to prior to the illness. If the injury or accident becomes long term, you may have to downgrade to a smaller house, get a cheaper car, and get accustomed to not eating out. But this is still much better than the alternative - long term unemployment with no income at all.
If you don’t have disability insurance and something happens, you’ll regret not paying the small premium for coverage. Be sure to check with your HR Department to determine if you have short-term and long-term disability. If it’s not provided, you can comparison shop with insurance companies to find a premium level that works for you.
Because you never know if you’ll end up with a serious illness or having a physical accident, disability insurance provides you with a certain peace of mind. The disability may be permanent, and you won’t want to have a permanently impaired financial situation on top of your medical problems.
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