Protecting your income is an important and often overlooked step in financial planning, and since May is Disability Awareness Month, it’s critical to consider the risk of disability before it’s too late.
There are at least a couple of things we can say with confidence about disability insurance: 1) many people don’t have it (even if they don’t believe it will happen to them), and 2) those who don’t have it probably don’t realize how common it is to incur a disability during one’s working years.
According to a 2019 study by the Council for Disability Awareness (CDA) at least 51 million working adults are without disability insurance other than basic coverage available through Social Security. That’s not because they don’t see some risk of losing income due to a disability, rather they greatly underestimate the level of that risk and the impact it will have on their everyday life.
Remember: Your income is your most valuable asset.
Carol A. Harnett, President of CDA, notes that the “impact of Covid on disability claim experience is still evolving, adding that “on the group side, Covid claims became a top five cause of short-term disability.” The good news is that Covid seems to be dropping out of that top five category. However, long-term, and individual disability claims may be impacted by people experiencing “long Covid.”
In a recent podcast, Carol summed up where disability insurance might fit into the financial planning for many Americans. “I think health insurance is the most important benefit you can select. Providing protection for your income through disability insurance is the next biggest player underneath the employee benefits umbrella. And your retirement planning is critically important; in many ways, it’s another form of income insurance that pays out once you’re no longer working.”
Despite the differences between generations and job employment status, independent disability insurance makes sense for all. The millennial generation’s ability to earn an income may be its most important asset at this point in their lives and protecting that income becomes just as critical. The same can be said for older generations who may discover that their employer’s group disability insurance coverage has now become insufficient to protect their income.
Your advisor at Barnum Financial can answer your questions about disability insurance and help you make sure that you have the coverage that is right for you and your family.