Disability can have a staggering effect on both the physical and financial well-being of an individual. Most people are inadequately prepared for a sudden loss of income, as about 80 percent of the population could not remain financially viable for more than 2 months. Many companies offer disability insurance as part of their benefits package, but in many cases, waiting periods apply before the coverage goes into effect.
Age and Disability
The likelihood of becoming disabled increases with age. If you are at least 35, you have a 50 percent chance of becoming disabled for a period of at least 90 days before reaching the age of 65, and almost 15 percent of those between 35 and 65 will experience a disability lasting 5 years or more.
Financial Implications
Disability is a major factor regarding people losing their homes. About 46 percent of all home foreclosures are the result of a disability. Also, even if you managed to save 10 percent of your income per year, a disability lasting 1 year would wipe out 10 years of the principle. Since the average person spends up to 75 percent of available cash, he would require a considerable amount of disability insurance to replace the loss of income.
Impact of Social Security
Many people believe that Social Security Disability Insurance will cover their income needs if they become disabled. However, only about 35 percent of those who apply for SSDI actually qualify, and the average estimated monthly payout in 2009 will be $1,064 according to soundfinancialplan.com. Additionally, you need to have worked and paid into Social Security for at least 10 years before becoming eligible for benefits.
Injuries Outside of Work
Many workers also believe that Workers Compensation protection is the only disability coverage they need. However, 90 percent of all disability is caused by an occurrence outside of the workplace. Illness, not accident, is the cause of 90 percent of all disabilities. The leading cause of long-term disability is cancer, and the leading cause of short-term disability is pregnancy.
Frequency of Disability
About 375,000 Americans become totally disabled each year. While a fatal automobile accident occurs about every 12 minutes, a person becomes disabled every 14 seconds. Losses due to disability are twice as great as those from automobile accidents, and three times greater than those caused by fire.
Tags: Social Security, becoming disabled, believe that, Disability Insurance, disability insurance, disability lasting
