You may be young, but you’re not invincible. According to the Social Security Administration, more than one in four 20-year-olds will become disabled prior to reaching retirement age. Yet, currently four in every ten workers do not have any disability insurance at all. Here are four reasons why you should not be in that statistic:
Your health insurance may cover your medical bills but it will not put food on your table or gas in your car. Disability insurance helps you replace your lost income that you used for everyday living expenses. Most young people do not have very much in savings yet, since they just entered the workforce, and are living paycheck-to-paycheck. So really, you can’t afford NOT to have disability insurance!
- Workers Compensation Isn’t Enough
Even though you might have workers compensation insurance through your employer, less than half of all disabling conditions of young workers are workplace-related. That means that you are more likely to get a disabling condition that does not qualify for workers compensation insurance.
- Government Benefits Aren’t Much
Sure, the government will give you some bare-minimum disability benefits through Social Security…if you have been disabled for the last 12 months! If you can’t make it a year on your savings, you’re out of luck with government benefits. Short-term disability insurance could help you within weeks!
- It’s Not That Expensive
Disability insurance really is not all that expensive, especially considering the great risk you’re protecting against. It could just be a monthly $10-45 out of your paycheck. Many employers offer group rates that are less expensive. You can also reduce your premiums even further by extending your elimination period (the period before benefits kick in), shortening the term of your coverage, or replacing less of your income. Disability insurance is also significantly cheaper and easier to get when you are young and healthy. Don’t wait until your symptoms start!
Another component of disability insurance worth mentioning is the difference between “any occupation” and “own occupation” insurance. Any occupation means you must be incapable of doing any job, not just what you currently do. The premiums are significantly cheaper than own occupation, however this kind of plan can be risky for highly specialized employees. For example, if you are a surgeon and lost your hand making you unable to perform surgeries, but you can still flip burgers at McDonald’s with the other hand, any occupation disability insurance would not accept your claim (but you would still have a significant income reduction). However, if you had own occupation insurance, any injury or condition that prohibited you from performing surgery (your current occupation) would qualify you for disability benefits. Knowing this distinction is important when analyzing your disability insurance coverage.
No one wants to think about the worst happening. However for you and your family’s needs, you should protect yourself against the risk of becoming disabled at a young age by having disability insurance. It is way better to be safe than sorry!
As those job offers and benefits packages start rolling in, consider scheduling an appointment with a Powercat Financial Peer Counselor before the end of the semester. We would all be happy to go over your offer(s) to further explain your benefit options, including disability benefits.
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