May Is Disability Insurance Awareness Month
As the calendar turns to May and the signs of spring continue to appear, it seems everybody has a little extra hop in their step with warmer weather on the horizon. The cornerstones of May fill the calendar – Mother’s Day, Memorial Day and even the BBQs with friends and family, but it’s also “Disability Insurance Awareness Month”. This designation serves as a timely reminder to do a quick self-assessment about your insurance and financial needs.
Things to Consider
One of the most common questions I receive from family and friends outside the insurance/financial services industry is “how much disability insurance do I need?” There’s really no concise (or easy) way to answer that question—it’s influenced by a variety of factors including:
Your income? Are you the main breadwinner in the family?
How much coverage does your employer provide? Or, do you own a private practice and are responsible for finding your own coverage?
Your age (how far away is retirement)?
Your family and dependents?
Your lifestyle—house(s), vacation travel, automobiles? Assets and debt (i.e., investments, school debt)?
As I mentioned in a blog entry a couple of weeks ago covering retirement planning, variables such as these are great questions and scenarios to work through with an insurance professional. The one question that I can answer, unequivocally, is yes, you do need some type of disability income insurance, whether it be a solid core plan or supplemental to what you have through work. Your income is the number one most valuable asset to protect because everything flows from your ability to earn a living.
By the Numbers
According to statistics published by The Council for Disability Awareness, approximately 12% of the total population in the US is classified as disabled and 50% of those are in their working years (18-64). And although the average long-term disability lasts 2.5 years, more than 1 in 5 workers will be disabled for five years or more during their career.
You may be thinking, “This won’t happen to me.” If so, then you are among the 65% of people who think they have a 2% or less chance of becoming disabled. The fact is, the odds are closer to 30%.
Consider for a moment what would happen to your lifestyle – your carefully crafted plans for the future – if you were disabled for five years? Or even one?
Now, I’m confident that physicians are generally very cognizant of the need for Disability Income protection. I’d encourage you, while it’s top of mind, to take some time and make sure your coverage is up to date and consistent with your career stage, income, lifestyle and other financial needs.
When you do this review, be aware that physicians have specific needs that may be different than those of the general population. I’d encourage you to make sure that your current (or future) plan provides own-occupation coverage to at least age 65; be sure your coverage is from a reputable carrier, rated “A” or better by A.M. Best, an independent rating analyst; look for specialty benefits, such as a student loan payoff provision; portability, so you can take it with you if you change practice venues and residual benefits.
Nobody means to overlook their insurance needs. But physicians are so time-strapped that it’s easy to let the topic slide until a more convenient moment. If you were disabled by an accident or illness tomorrow, it would be too late to fill the financial gaps that could derail the financial stability you’ve attempted to build over the years.