Many expect older people to become disabled or ill at one point or another. What about people in their twenties? Do young people also need disability insurance? The data makes a strong case for both old and young people having, at minimum, short-term disability insurance.
Why You Need Disability Insurance Regardless of Your Age
According to the Social Security Administration, almost 3 in 10 workers entering the workforce today will become disabled before retirement. More than 1-in-4 of those individuals will be in their 20s. As expected, individuals between 35 and 65 years of age have higher rates of disability. For them, 7 out of 10 will become disabled for three months or longer (Source: Commissioner’s Disability Table).
The fact is that disabling injuries occur in the United States at a rate of every one second (Source: National Safety Council Injury Facts). The health impacts alone can be devastating, but so too can the financial effects of a disability. Did you know that more people lose their homes due to disability than fire or death, and that over half of all personal bankruptcies stem from individuals who are unable to pay their medical bills?
So back to the original question, regardless of your age, disability insurance is a vital protection that is needed. For many people, purchasing short-term disability is a smart financial move.
What Short-Term Disability Covers
Short-term disability insurance provides coverage from the effective date of the policy for injuries that occur outside of work and disabilities such as chronic conditions (e.g., back injuries, cancer, heart disease, etc.) Among the features that should be sought in a short-term disability policy are: coverage for partial disability, a survivor benefit, mental illness benefit, alcohol/drug benefit, terminal illness accelerated benefit, pregnancy benefit, and a waiver of premium provision. Many short-term disability policies will also offer optional riders for continuing a disability benefit, as well as for physical therapy and catastrophic losses.
The best disability policies will be portable enabling a worker to retain the coverage even if they change their job. They also will be guaranteed renewable to a certain age (e.g.,72) depending upon the insurer and the state in which the insured individual resides. Short-term disability insurance payments are determined based on an individual’s income. In many instances health questions are included but there is no medical exam required.
How Are Disability Benefits Paid
Individuals covered by a short-term disability insurance policy, who become disabled or killed due to an unexpected accident, injury or illness, receive disability benefits to help them meet their expenses. Depending on the coverage purchased, a short-term disability policy covers a given percentage of one’s income (i.e., between 50-66 2/3%) for a period ranging from one to six months with a maximum benefit period of 52 weeks. Many insurers have caps on the monthly payment amount. When a disability occurs, the individual files a claim with the insurer. Payments are then continued on a timely based for the duration of the coverage and will provide vital cash flow to meet expenses and peace of mind that a disability won’t lead to a major financial problem.
