What are the Chances?

The biggest question most accountants have for us when they call is "Why do I need disability insurance? What are the chances I'll use it?". You are familiar with numbers and in order for something to make sense, it has to reconcile. Here are the facts on disabilities²:

• More than 25% of today's 20-year-olds will become disabled for at least a year before age 65.
   
• Most disabilities are NOT accidents, they are illnesses. Cancer, heart disease, strokes, and other illnesses account for the majority of long-term disabilities. 
  • Musculoskeletal disorders are the #1 cause of disabilities. These include things like arthritis, back pain, and joint disorders. 
  • Cancer is #2 at 15% of claims.
  • Mental health is a major claim situation, accounting for almost 10% of all claims.
     
• Most disabilities are not work-related, so it doesn't matter that you have a desk job.

The reality is that most disabilities are illnesses, and illness doesn't care what you do for a living. Even though you have a safe job where you are unlikely to experience a disability at work, you still need to protect your income from things like cancer, heart disease, stroke, and other illnesses.

Two Jobs - Which do you choose?

Let's look at the cost of disability as you might as an accountant. Let's say you're looking to change jobs and you have two options. Let's assume that both jobs are in a similarly nice part of town, great office space, and similar benefits with one exception:

Job A

• Income while working: $100,000
• Income if sick or hurt and unable to work: $0

Job B

• Income while working: $98,300
• Income if sick or hurt and unable to work: $60,000 tax-free

Which job would you choose? 

Having advised thousands of people on disability insurance for over 20 years, we've never had someone say they would opt for Job A. Job B is the job that provides disability insurance and the $1,700 per year difference in income is the approximate cost for a disability insurance policy.³

Get Paid More for Disabilities Related to Certain Illnesses

Since most disabilities are illnesses, not accidents, it would be nice to have your policy pay you more for illnesses. Guardian¹ has a built-in feature to their ProVider Choice policies that does just this for certain illnesses. 

The Serious Illness Supplemental Benefit Endorsement will pay you an additional 50% of your monthly benefit on top of your regular monthly benefit for up to 12 months over the life of your policy if you become totally disabled from cancer, a stroke, or a heart attack.

¹Individual disability income products underwritten and issued by Berkshire Life Insurance Company of America (BLICOA), Pittsfield, MA. BLICOA is a wholly-owned stock subsidiary of The Guardian Life Insurance Company of America (Guardian), New York, NY. Product provisions and availability may vary by state.
² https://disabilitycanhappen.org/overview/
3 ProVider Choice Select policy in Maryland. 45-year old, class 6, male, $5000 per month benefit, 90 day elimination period, to age 65 benefit period, with the only option being the basic partial rider.