The Elevated Recognition of Income, its Importance (and Protecting it!)
The beginning of 2020 has been a roller coaster. With millions of workers suddenly out of employment overnight, the recognition and importance of income has been magnified. Fortunately, for many, unemployment will provide a modest, yet significant lifeline.
Whether in challenging times or prosperous economic conditions, income is equally as important and unemployment is just one risk. The loss of income due to an illness (~90% of the time) or an accident is a risk that 1 in 4 working Americans will experience during their working career. This risk is defined as being out of work for at least 90 days. For most long-term disabilities reaching 90 days this translates to a claim averaging 3 years. The amount of lost income can be more than significant!
Yes, there is Social Security Disability Insurance (SSDI), but for most the income replacement amount leaves much to be desired. And with a strict definition of disability to qualify for SSDI it is far from a sure thing nor are benefits usually paid as quick as they are needed. Private disability insurance provided by an employer or purchased individually is recommended to help plan for this risk as part of a financial plan.
Unfortunately, disability insurance does not have the recognition and awareness it should.
Research in 2018 by Unum showed that nearly half of workers spend 30 minutes or less (per year) reviewing their benefits prior to open enrollment. Compare that with streaming subscribers of Netflix who spend 19 minutes on average each time (many times per week) before deciding what TV show to watch.
Picture: Reviewing employee benefits or picking which TV show to stream? Source: https://unsplash.com/@austindistel, www.distel.com
Yes, there may not be a correlation and many employees may have coverage provided through their employer, but may not realize how much coverage they have (and often it is not enough for those with higher incomes), if they can sign up for it, or if they have it at all. In either situation more attention and promotion of this benefit is needed. Studies repeatedly show that with good communication and education, employers are more likely to offer and employees more likely value disability insurance. The Council for Disability Awareness is one of many in the industry that have done research showing this knowledge gap.
Please share this message as you see materials this Disability Insurance Awareness Month and do not forget to review your own coverage. The planning done today may be the unexpected lifeline needed down the road.
Cited information:
https://www.ssa.gov/disabilityfacts/facts.html
https://www.unum.com/about/newsroom/2018/august/unum-auto-enroll
#DIAM #DIAM2020 #DisabilityInsurance