MD Preferred Blog

*The views expressed by the authors below do not represent the views or opinions of MD Preferred Services.

Who Needs Personal Disability Insurance?

Friday, June 22, 2018

By: Gary Fegan

Ask yourself the following questions. If you answered yes to any of them then you mostly likely need the coverage:

1. Do you depend on your income to survive financially? How would you pay the bills if your income stopped? Another way to answer this question honestly for yourself is, am I able to take a 6-12 month unpaid vacation tomorrow. That’s really what experiencing a disability could be like. It is like having an extended period of time with no more income coming in because you are too sick or injured to work. One can only hope that should you become disabled it is only for 6 months, the reality of a long term disability could be much worse.

It's human nature - most of us don't want to think about getting sick or injured, or about struggling financially because we are unable to work. Yet it's a possibility we all must consider. The 1985 Commissioner's Individual Disability Table A provides data on the probability of an individual becoming disabled. These are only probabilities and actual results will vary on each individual's characteristics (Le. age, gender, occupation, health status, etc.).

Disability Length

Request a Disability Insurance Quote now to begin the process of purchasing your own policy.

The Chances of Remaining Disabled
Not all disabilities are short term in nature.

Probability of Remaining Disabled

2. Do you have a family to support? How will you take care of them if you don’t have an income? Will your spouse be able to work or will he/she have to take care of you? Does he/she have the ability to replace your income? This is the number one reason people end up purchasing an individual disability insurance policy. We know because we ask every single person who has ever requested a disability insurance quote from our office during the last decade. Many of us require two incomes to support our current lifestyle, and sometimes it is necessary to purchase coverage for both the husband and wife to make sure that dual income is protected.

3. Do you have a mortgage? For most people, this is their biggest monthly expense. In fact, the average household spends 34.1% of their income on housing!1 Not having a disability insurance policy puts your entire financial success at risk, including the home you and your family live in. Just having a policy helps insure that regardless of sickness or injury, you will likely be able to make sure your family has a roof over their head should something happen.

4. Do you have car payments? The average US consumer spends approximately $8,758 annually on transportation 2! Are you one of them?

5. Do you like to feel financially secure? How long would you be able to survive financially without a paycheck? Most people, regardless of their income tend to spend a large portion of their income on their own lifestyle. It is just amazing how expenses rise along with income. Even people making a half a million or more a year need disability insurance just as much as people earning $50,000 a year. If you have more expenses, usually that just means you are going to need more personal disability insurance.

6. Do you like to take vacations? I can tell you that one of the first things to go when finances are tight is discretionary spending, such as vacations. During a claim, people are always telling me how they did not expect the amount of new bills that come along with being disabled. You will typically have more medical bills, and depending on the disability, you may have to hire people to attend to things you used to do on your own like mowing the lawn, shopping, etc.

7. Do you like to help others financially? Maybe you have family members that need your financial assistance. Or maybe you just like helping those less fortunate. If you can’t take care of your own financial needs, how will you be able to help them?

8. Do you have credit card bills? According to NerdWallet.com, the average credit card debt for indebted households in the U.S. is $14,517 (as of March, 2012). Are you one of them?

9. Do you pay alimony or child support? Unfortunately with so many marriages failing, there are many people responsible for alimony and child support. If you are too sick to work, how are you possibly going to make sure you are able to meet this financial obligation?

10. Does your employer offer group disability insurance coverage?
Even if they do, it is more than likely not enough to cover your monthly expenses. Most group plans pay 60% of your base pay. Since most group policies are paid for by your employer, the benefits you would receive are taxable. Therefore, you may have a significant shortfall to cover with an individual policy.

11. Are you eligible for Social Security? If so, you may qualify for Social Security disability benefits. This would not be enough income in most cases either. Most people could not survive financially on the small monthly amount paid by Social Security. Furthermore, it is extremely difficult to qualify for disability benefits through Social Security Administration.

12. Are your savings short of your retirement goals? If so, how would you possible be able to save for retirement if you are disabled? In the end, unless you are working for the fun of it, and not because you need the money you really do need disability insurance.

I have asked many people what they think their biggest asset is. Most mention their house or retirement accounts. In reality, for most people, their biggest asset is their ability to work and earn an income.

So who really needs disability insurance? The simple answer is almost everyone. Whether you are single or married, if you have children or not.

1Source: Consumer expenditures (US Department of Labor, US Bureau of Labor Statistics, April 2009
2Source: Consumer expenditures (US Department of Labor, US Bureau of Labor Statistics, April 2009

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS), 1901 Research Blvd #400 Rockville, Maryland 20850. Securities products/services and advisory services are offered through PAS, a registered broker-dealer and investment advisor, (240) 683-9700. James Fegan, Financial Representative. The Guardian Life Insurance Company of America (Guardian), New York, NY. PAS is an indirect, wholly owned subsidiary of Guardian.
Financial Balance Group is not an affiliate or subsidiary of PAS or Guardian.
PAS is a member FINRA, SIPC.

The views and opinions expressed herein are solely that of the author and do not necessarily represent the views and opinions of The Guardian Life Insurance Company (Guardian), or its subsidiaries or affiliates thereof.

2018-61534 Exp 06/2020

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