By Kate
BillSavings.com Brief: An alarmingly high number of people suffer an injury or medical condition that prevents them from being able to work. Social Security and, in some cases workers' compensation may provide benefits for some people. Others benefit from disability insurance policies they purchased prior to being injured.
The statistics are startling: every year you have about a one in eight chance of suffering some kind of disability or incapacitating injury. In fact, the Social Security Administration web site reports that someone who is 20 years old now has a three in ten chance of suffering an incapacitating injury before reaching retirement age. Be it a stroke or a broken collarbone, a sudden condition that prevents you from being able to earn an income can be detrimental. And if you are single and rely solely on your own income, this can spell debt if you are not prepared. Having an emergency savings account is vital, but it is only one piece of the puzzle. Disability insurance is a key component to making sure that you will pull through a period of disability without suffering a major blow to your financial well-being. The good news, you may already have some degree of disability coverage through your employer. Before you venture onto the softball field or hop on your bike, it is wise to find out just how much coverage you do have.
- Through your employer. Chances are your employer offers you healthcare coverage, and possibly even disability and life insurance. If you do get disability coverage through work, look into your policy to see if you need to purchase any additional coverage or put away more money into your savings. Disability coverage varies greatly policy to policy. For example, you could be covered for a mere few days you are out of work. Some will cover you for up to two years. Others will pay out disability benefits until you are 65, though they often have a waiting period before kicking in. When checking on the extent of your coverage, do not neglect to see what portion of your income your coverage will compensate you for. Many policies will pay out 50 to 70 percent of your income. Whatever the number, make sure it is an amount that allows you to live comfortably without having to rely much on your savings. Do not forget to look at additional insurance coverage, Workers' Compensation and Social Security. Avoid thinking that you will be able to rely on credit cards in the event that you are unable to work.
- An outside policy. So maybe your employer does not offer disability coverage for whatever reason, or you are self-employed and would not be able to perform basic work-related tasks in the event of a broken ankle. In either case there is a disability insurance policy out there for you. A huge advantage of benefits paid out on this type of policy is that you do not have to pay income taxes on them, whereas you do with a policy acquired through your employer. Plus, you have a pretty wide range of options when it comes to coverage and can tailor your disability insurance coverage to suit your needs. You may actually be better off if you go with an individual policy, given the fact that there are no taxes and the freedom you have to shape your disability policy. Plus, you can speak one on one with an insurance agent and come up with the right type of policy.
- Social Security benefits. While you have to meet certain criteria to be eligible for Social Security disability benefits, if you are eligible, this can be an important source of income while you are unable to work, especially of your employer's disability insurance policy does not pay out enough to let you live comfortably. The Social Security Administration pays out disability benefits through two programs: Social Security disability and Supplemental Security Income. The eligibility guidelines for these programs are strict. For example, Social Security disability only pays out benefits to individuals who will be unable for a year or more or have a medical condition that will result in death. Plus, you have to have been working long enough to have paid adequately into Social Security to qualify for benefits.
- Workers' compensation. Offered through the US Department of Labor (DOL), this program provides medical care assistance, rehabilitation, and wage compensation to people whose injuries or illnesses occurred while at work. The DOL also has a number of programs that apply to specific industries, such as the Longshore and Harbor Workers' Compensation Program. Again, you and your family are only eligible for Workers' Compensation benefits if you are injured on the job.
Preventing financial loss
Suffering an incapacitating illness or injury is tough enough, whether you are supporting a family or you are single and rely solely on your income. While Social Security and Workers' Compensation can provide some relief if you are injured, it is wise to make sure you will be covered to the extent that you can live comfortably during the time that you are unable to work.
7/2/2008
