Of course, we’ve all been there!
To make matters worse, when you try to convey your feelings about said day to your spouse, colleague or anyone else within an earshot of your self-pity, they generally respond with the requisite, “well, it could be worse”?
And they’re right -- it could be worse. It could ALWAYS be worse! It’s just that hearing that sentiment doesn’t exactly help turn things around...am I right?
I’m probably dating myself here, but do you remember Alanis Morissette’s hit song from the 90’s: Ironic?
In it she talks about life’s unfortunate timing, describing the irony of things like rain on your wedding day or a free ride when you’ve already paid.
Toward the end of the song, she -- in my opinion -- perfectly articulates the overall premise of this post when she says:
Well, life has a funny way of sneaking up on you
When you think everything's okay and everything's going right
And life has a funny way of helping you out when
You think everything's gone wrong and everything blows up
In your face
I’ll admit, I’m fairly positive that she wasn’t in the studio writing this verse because she was oh-so-passionate about insurance planning.
But I am! And since I’m not a singer/songwriter (you’re welcome), I’ve decided to borrow her words to explain the importance of insurance, not just for loss of life, but also loss of income related to disability.
Don’t Underestimate Your Ability to Earn an Income
When meeting with clients, specifically those with young families, I’ve started to notice a trend. While most realize the importance of life insurance as a way to secure the financial future of their family in the event of an untimely death, many overlook the benefits of securing insurance on their income.
Here’s the thing: Illness is a respecter of no person!
In fact, the loss of income due to disability, whether caused by an accident or illness, usually deals an unexpected gut-punch to the family budget. If you find yourself out of work for any length of time due to disability, not only have you just lost the source of income to pay your monthly obligations, but you may also incur additional expenses related to the disability.
Having the ability to earn an income is a key ingredient of any financial plan. If a family loses that ability, the foundation required of financial stability has been removed. When volunteering at my local food pantry, the majority of people that found themselves in financial need were those who encountered some type of unexpected disability that impaired them from work.
Don’t think it could happen to you? Think again!
Here are a few stats that are both surprising and sobering:
- According to the U.S. Social Security Administration Fact Sheet, dated Feb. 7, 2013: 25% of today’s 20-year-olds will become disabled before they retire.
- Approximately 90% of disabilities are caused by illness rather than accidents. Of those, the most prevalent cause remains musculoskeletal problems such as muscle, back and joint disorders, including chronic back pain and arthritis.
- Over 12% of the population is currently classified as disabled. Of that, approximately 50% of those disabled Americans are in their working years -- between the ages of 18 and 64.
- The average monthly SSDI benefit in 2017 is $1,171
- The American Journal of Medicine, Vol. 122, No. 8, Aug. 2008 reported that every 90 seconds someone files for bankruptcy in the wake of a serious injury or illness.2
So, What Should You Do?
Although you may never need to use a disability (income protection) plan, having one in place is paramount to keeping your financial goals on track. You don't want to make a bad situation worse by not having it. And by not having it, you mess up everyone's pat response of 'it could be worse."
If you don’t already have a plan in place, start by looking at your employee benefits. While you’re probably familiar with the health and retirement aspects of your benefits, you might be surprised to know that many employers also offer income protection through disability plans.
If offered, look for information on both short-term and long-term disability insurance. As an added perk, some companies automatically provide short-term disability for free and offer long-term disability at a discounted rate.
This would be your best bet to start looking, as it will usually offer the most coverage for the least premium dollars.
But remember, like most things -- all disability plans are not created equal. That means coverage may vary from plan-to-plan. If you have any specific questions, don’t hesitate to reach out to your human resources department or the insurance company directly get answers.
Alternatively, if your employer does not offer this benefit option, you may still be eligible to obtain income protection through a private policy.
While slightly more expensive, private disability policies offer the same income protecting benefits as the employer group plans, and are relatively easy to qualify for given you work in a semi-safe career and are remotely healthy.
Although we never know where life will take us, preparing for those “it could be worse” moments is always a prudent idea. If you need help navigating your insurance plan, or just want a second-opinion on what you currently have in place, we should talk. Click here to schedule a complimentary meeting where we can discuss the specifics of your insurance needs and create a plan to prepare for the unexpected.
Pamela J. Horack, CFP® of Pathfinder Planning LLC provides personal financial planning advice and asset management for a simple fee to young adults and working families in North and South Carolina through group classes, one-on-one planning, and ongoing advice.