Disability Income Insurance: Protects your most valuable asset! Your ability to earn an income.
Each year 12% of the adult population suffer a long term disability. Indeed, medical advances can be felt far beyond the highway. A generation or two ago, a worker who suffered a heart attack on the factory floor would have died.
Today, paramedics and emergency medical technicians arrive in minutes, ready to stabilize and transport the patient to the hospital -- by helicopter, if necessary. Throughout much of the country, EMTs are able to install pacemakers right at the scene.
And there’s more.
Has your liver gone bad? No problem. We’ll give you a new one.
Clogged arteries? We’ll predict the stroke before it occurs, give you a quadruple bypass, and you’ll be back on the tennis court in six weeks.
Failed kidneys? We’ll hook you up to a machine that will take over the job.
Modern medicine can do many things. Above all else, it can keep you alive. But that doesn’t mean you’ll never miss a day of work.
1 out of every 7 workers will suffer a five-year or longer disability before reaching age 65.
At age 32 your chances of suffering a three-month or longer disability is 6 times more likely than death.
At age 35 your chances of suffering a three-month or longer disability is 50%.
At age 45 your chances of suffering a three-month or longer disability is 44%.
On average 7 out of 10 claims for Social Security disability benefits are refused the first time requested.
The Air Bag Phenomenon
Interestingly, the reason you are so likely to suffer a disability is exactly because you are so unlikely to die. Since 1960, the frequency of death from the four leading causes have sharply decreased, while the frequency of disability has sharply increased. I call this the Air Bag Phenomenon.
If you live in a major metropolitan area, you’d agree that there are 10 rush hours every week, one each weekday morning and evening. How often do you hear of a traffic accident in those rush hours?
Every time, of course.
But in how many do you hear that a driver was killed in a rush hour accident? That’s much less common. Since fatalities are unusual, most of us don’t give those accidents a second thought, other than to complain that someone made us late. But the truth is that someone is getting hurt in those accidents. After all, you’re not likely to avoid injury after sustaining a collision at 55 mph.
And that’s my point: Due to the advent of airbags, many people now survive auto accidents, who 10 years ago would have been killed. But this does not mean accident victims just walk away from the scene. Rather, it simply means they go to the emergency room instead of the morgue.
Indeed, a study by the University of Pittsburgh showed that people protected by an air bag who are involved in a high-speed, head-on collision often suffer a variety of injuries caused not by the collision, but by the airbag itself -- including burns to the chest and face, loss of hearing and vision, and broken forearms.
Airbags also fail to prevent legs from being broken. And research from the University of Florida revealed that many drivers whose lives were saved by airbags suffer injuries that are not readily apparent to rescue workers, such as lacerations to the liver. Thus, airbags do not assure that you will survive injury-free if you are in an accident.
So while airbags have been very good news for the life insurance industry (as the number of highway fatalities has dropped), it has been bad news for the health and auto insurance industries (which pay the medical expenses of accident survivors).
Statistics were obtained from Commissioner's Disability Tables and the Senate Finance Committee.
Disability insurance pays cash benefits to the policyholder in the event the insured is unable to work due to sickness or injury. That cash benefit ranges from 50% to 70% of income. The insurance company will not pay more than 70% of income because there must be an incentive to return to work.