Guardian Disability Insurance Brokerage

Why Do I Need Disability Insurance?
What Are Some Of The Odds?
by Gary Fegan

If you think of your income as an asset - which it is likely the biggest asset you will ever own, would you want to insure it? You insure many less valuable assets against risk of loss - car, home, jewelry, etc. You do not want to forgo insurance or under-insure your biggest asset, and you should not under-insure the risk of your cumulative earnings. You need to insure this risk with an individual disability insurance policy.

Disability Insurance offers you the financial protection from the myriad of things that could hinder your ability to earn a living.

Most people think that disability does not happen to younger people and that most disabilities are due to work-related accidents. In actuality, the odds of having a long-term disability (one that lasts 90 days or longer) before age 65 are as follows:

• Savings - You could wipe out ten years of savings in six months of being disabled (assuming you saved 5% of your income).


• Social Security - Benefits from Social Security are far from guaranteed. Approximately 65% of all applicants are denied benefits upon their initial claim. If one does qualify, the maximum benefit in 2008 was about $2,000 (this does not include dependent’s benefits) and the average was $821. Also, benefits received may be subject to federal income tax.***


• Group Disability policies - A group plan typically does not include bonuses and pension contributions and will offset with any government program benefits you receive. Group plan premiums typically can be raised and the plans can be canceled at anytime. If your employer pays the premium, the benefits you receive may be taxed as ordinary income. Many group plans do not offer own occupation definition disability - which means that your benefits may be reduced or stopped if you go back to work in any other occupation while collecting disability benefits.