Disability Income
Insurance
When it comes to working hard, and playing hard, don't forget about protecting your employment income.
Disability
Income
Insurance
When it comes to working
hard, and playing hard,
don't forget
about protecting your
employment income.
Disability Income Insurance Overview
A mounting crisis confronts millions of working Americans: insufficient, or no, protection when it comes to Disability Insurance (DI).
In the US today, roughly 1 in 4 20-year-olds and almost 1 in 3 30-year-olds will become disabled before they reach normal retirement age.¹ Over 51 million working adults in the United States are without disability insurance other than the basic coverage available through Social Security.²
To add insult to injury (pun intended), only 40 percent of US households have enough in liquid savings to cover at least three months of their recurring expenses, and only 28 percent can cover at least six months.³ Presently, the absence of emergency savings, escalating medical expenses, and a general decline in employers providing benefits to their workforce have collectively resulted in a significant vulnerability for numerous American workers and their families. The lack of income protection has led to heightened financial challenges for many Americans when faced with the necessity to take time off work due to illness, injury, or pregnancy.
A financial professional can help conduct a comprehensive assessment of your current employee benefits and income from all avenues, identify potential gaps, and design a policy that can help you reduce your disability insurance risk. *
What is Disability Income Insurance?
Inadequate Disability Protection Can Be Devastating
Will Existing Options Be Enough?
What is Disability Income Insurance?
Disability insurance, alternatively referred to as disability income (DI) insurance, safeguards one of your most crucial assets—your income. If you experience prolonged sickness or injury, rendering you unable to work, DI serves to partially cover your income, encompassing bonuses and commissions. It’s essential to recognize that relying solely on group long term disability insurance provided by your employer may not be sufficient.
We can help you understand your current income protection (if any) and what’s at risk. A financial professional can help conduct a comprehensive assessment of your current employee benefits and income from all avenues, identify potential gaps, and design a policy that can help you reduce your disability insurance risk.
Inadequate Disability Protection Can Be Devastating
You probably insure your home and auto, however the income you earn while employed throughout your career is arguably your most valuable asset. So, becoming disabled and unable to work for any length of time can be financially devastating to you and your family. A 2019 study of consumer bankruptcy filings found that 77.8% of debtors cited income loss as a contributor to their bankruptcy. This included 44.3% specifically citing medically related work loss as a contributor.4
The figures below demonstrate the potential financial loss of future earnings if you were to become permanently disabled. For example, a 35-year-old worker with an annual salary of $75,000 who experiences a permanent disability may lose up to $2,250,000 in potential earnings by age 65.5
Graphic: Massachusetts Mutual Life Insurance Company, 2023 6
Will Existing Options Be Enough?
Personal savings, Social Security Disability Insurance, or group long-term disability (LTD) plans provided by employers can serve as valuable resources in the event of disability. However, they might offer less support than anticipated. This shortfall, also known as the disability insurance “gap”, not only influences your daily quality of life but could also hinder your progress toward achieving your dreams.
For numerous individuals, the challenge lies in accurately determining the extent of income covered by existing options. Understanding the specific benefits to be paid, the income included in the coverage, and distinguishing between taxable and non-taxable benefits are essential initial steps in recognizing any potential gaps in your disability income insurance (DI) coverage.
A financial professional can help conduct a comprehensive assessment of your current employee benefits and income from all avenues, identify potential gaps, and design a policy that can help you reduce your disability insurance risk.
- Social Security Administration, Office of the Chief Actuary, Disability and Death Probability Tables for Insured Workers Born In 2000, Johanna Maleh, FSA, EA, and Tiffany Bosley, FSA, June 2020
- American Council of Life Insurers, Assessing Americans’ Financial Retirement Security, Report September 2017
- Federal reserve, Money in the Bank? Assessing Families’ Liquid Savings using the Survey of Consumer Finance, FEDS Notes, 1. Neil Bhutta and 2. Lisa Dettling, November 2018
- NIH- National Library of Medicine, Medical Bankruptcy – Still Common Despite the Affordable Care Act, David U. Himmelstein, Robert M. Lawless, Deborah Thorne, Pamela Foohey, Steffie Woolhandler, March 2019
- Massachusetts Mutual Life Insurance Company, Disability Facts That Might Surprise You, 2023
- Massachusetts Mutual Life Insurance Company, Disability Facts That Might Surprise You, 2023
IMPORTANT DISCLOSURES
* Supplemental individual disability income insurance does not coordinate with your group long term disability coverage. Claim decisions are rendered independent of each other.
Product availability varies by carrier, state, and individual eligibility. Not all products listed are available in all states or to all applicants. Product descriptions on this page are for general informational purposes only and do not constitute a solicitation or offer to sell any specific insurance or annuity product. All products are subject to underwriting approval and applicable state insurance regulations. Riders and benefits are subject to additional charges, terms, conditions, and limitations. Variable products involve investment risk, including possible loss of principal, and are sold by prospectus. FundaDream Insurance Solutions, Inc. is a licensed California insurance corporation. Consult the applicable carrier contract for full terms, conditions, and limitations. FundaDream’s charitable giving is made from general corporate revenues at the sole discretion of FundaDream leadership and does not constitute compensation to any licensed insurance professional.
The information provided is not written or intended as specific tax or legal advice. FundaDream, its employees and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.
Insurance products and services are offered through FundaDream Insurance Solutions, Inc., California License No. 0M95835