Chances are your clients aren't really prepared. Eight in 10 workers are concerned about how they would pay their living expenses if they had to miss work for six months or longer due to disability. Yet, 70% of working Americans do not have enough savings to meet short-term emergencies and two-thirds of American families are living paycheck to paycheck. Have your clients complete the Personal Financial Security Plan, a good place to start in the disability financial planning process.Over half of all workers have never discussed how they would pay their bills if a disability stopped their income.
It's not unusual for many people suffering from a serious sickness or injury to lose their job and, with it, their employer provided medical insurance. While some may be eligible for COBRA, few have any idea how expensive that can be. Often with a long term disability comes unexpected expenses like higher out-of-pocket medical and personal care costs. Disability also causes 350,000 personal bankruptcies and nearly 50% of all mortgage foreclosures each year.
Most large employers provide some form of sick pay and long term disability income benefits for their full time employees. The wide majority of small employers, on the other hand, do not provide these benefits. More employers today are offering disability insurance benefits on a "contributory basis" but most employees don't elect coverage even though the cost can be relatively small. Some workers have purchased their own disability benefits. There is a lot of misinformation about disability benefits. For example it's not uncommon for employees to mistakenly think their medical insurance covers lost wages, it doesn't.
For the millions of workers relying on their 401(k) or IRA savings for their income during retirement, suddenly losing their income today can be catastrophic. If their paycheck should stop or be interrupted due to an accident or illness, their current contributions would also stop putting their financial security during retirement in serious jeopardy.
Social Security Disability Insurance is the primary disability insurance program for most American workers yet one-third do not understand how it works or even if they might be eligible. True, less than half of those that apply for disability benefits are approved and the average waiting period to receive Social Security Disability payments is 2.5 years, but close to 7 million workers are currently collecting monthly Social Security disability payments - averaging $1,004 per month - and almost half are under age 50.
In many cases, the major causes of disability today, such as, cancer, heart disease, obesity and back problems are directly linked to personal behavior. Establishing good personal habits including eating a balanced diet, exercising, visiting the doctor regularly, and avoiding smoking can significantly reduce and even prevent your chances of becoming disabled. More and more companies are recognizing the value of a healthy lifestyle and are offering wellness plans for their employees.
The number of American workers experiencing a serious accident or illness that keeps them out of work is on the rise. Three in 10 workers entering the work force today will become disabled before retiring. The average long-term disability today absence lasts 2.5 years. Over 90% of disabling accidents and illnesses are not work related and therefore are not covered under Workers' compensation. These facts apply to people of ages - young and old workers alike.
