Common Disability Insurance Mistakes


When considering insurance policies, it is important to include disability insurance, which is meant to help you cover living expenses if you become injured and unable to work. Though you may survive an injurious accident, you’ll need disability insurance to avoid going penniless as a result.When considering insurance policies, it is important to include disability insurance, which is meant to help you cover living expenses if you become injured and unable to work. Though you may survive an injurious accident, you’ll need disability insurance to avoid going penniless as a result.

Four Common Mistakes

While insurance policies like life insurance and disability insurance are not fun topics to discuss, they are still extremely important to consider when planning your future.

One of the most common mistakes a person can make is underestimating the need for disability insurance. In fact, bodily injuries are most commonly associated with the need for disability, but they represent the lowest percentage of disability claims.

“Musculoskeletal system and connective tissue disorders like arthritis and sciatica are the leading cause of new disability claims, coming in at 29 percent of new claims. Cancer is second at 15 percent of new claims. Injuries and poisoning combined represent 10 percent of new claims,” reports a June 2014 article in Forbes by contributor Ashlea Ebeling.

It should come as no surprise, then, that a second common mistake people make with disability insurance is ignoring the policy altogether and not buying any sort of coverage.

“Disability insurance becomes particularly important when people are in their 40s, when they are more established in their careers and are often reaching their peak earnings,” says Jonnelle Marte in an October 2014 article in the Washington Post.

Marte adds that according to the Social Security Administration, one in four of today’s 20-year-olds will be disabled by age 67. Purchasing a disability insurance policy is therefore extremely important in today’s age, whether it’s from your employer or through your own personal plan.

Following this, the third mistake commonly made with disability insurance is not having an adequate policy that will cover all expenses.

Many employers offer disability insurance to their employees through a group plan. However, the coverage is often meant to be short-term and may not be enough to cover all living expenses, Marte says. In addition, Social Security disability insurance is often not enough coverage, as it only kicks in for long-term disability and involves a complicated appeals process.

When considering insurance policies, it is important to include disability insurance, which is meant to help you cover living expenses if you become injured and unable to work. Though you may survive an injurious accident, you’ll need disability insurance to avoid going penniless as a result.According to a November 2015 article in Forbes by Founder and President of Potomac Wealth Advisors Mark Avallone, group plans offered by an employer are also not typically transferrable should you leave the company. This is especially important for millennials, who make up the largest population within the workforce today and reportedly change jobs every three to four years.

“If you can qualify, consider owning your own individual long-term disability policy that offers greater benefits and can be kept in force no matter how many times you change jobs,” Avallone says.

Lastly, the fourth basic mistake often made with disability insurance is forgetting to update the policy as you age. Just as with any insurance policy, the plan you put in place at the start of your career should be revisited and updated as you age and progress through life’s many stages, Caroline Ceniza-Levine, co-founder of SixFigureStart, advises in a June 2015 article in Forbes.

The disability insurance policy that is meant to cover a 20-to-30-year-old may not be enough coverage for the needs and living expenses of a 50-to-60-year-old, Ceniza-Levine says.

 

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