Common Myths About Disability Insurance: Myths Busted
Disability insurance is one of those financial planning tools that everyone seems to need, but no one wants to even think about until it’s already too late. In an era where health insurance, work benefits, and personal savings are so many charms, disability insurance is still plagued by a bunch of myths that cloud the facts. Let’s tackle the most common myths about disability insurance in this piece and help you make informed choices.
What is Disability Insurance?
To begin with, let’s get an understanding of what disability insurance actually is before jumping to its myths. This form of insurance is also known as income replacement in the event that an individual becomes sick or gets injured and is unable to earn. It effectively safeguards the earnings of an individual and helps him or her make ends meet when the going gets tough.
Disability insurance is broken into two main groups:
Short-Term Disability Insurance: This type is said to only pay out a particular percentage of the person’s yearly income for a limited period, like three weeks to three months, in most cases.
Long-Term Disability Insurance: This insurance comes into play as soon as the short term coverage ends and provides protection for several years, or till the age of retirement, depending on the said policy.
Now that we have a basic knowledge of what disability insurance is, let’s move on to the myths surrounding it, and demystify each of them.
Myth 1: Disability Insurance is Only for the Sick or Injured
Perhaps the most common misconception about disability is that it’s only necessary for already sick or injured individuals. This line of thought can cause a majority of the healthy population to avoid coverage because they think they are invincible.
Greatness of Attitude
Disabilities happen to people at their most inconvenient times regardless of their health status. In the United States, the Social Security Administration notes that one in every four 20-year-olds will become disabled before the age of retirement. Disability insurance should therefore be viewed as a precautionary and secure plan for any unforeseen circumstances.
Myth 2: I Get Enough Coverage from My Employer
A very popular opinion is that the acquired disability insurance by an employer would be enough to satisfy one’s financial needs once a disability occurs. Although employer plans can be beneficial in some sense, sponsored plans tend to be lacking more often than not.
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Reality
Self-employed people may be just as susceptible to some disability as those who are employed in an organization. In fact, the loss of the ability to work can be worse for self-employed persons as they do not have a similar level of benefits or savings. However, disability insurance offers a great hope for many and self-employed people are assured more about their earnings even in ill-health courses.
Myth 5: Social Security Disability Benefits Are Sufficient
It is often heard that in case a person sustains a disability, his/her day to day expenses will be met through the Social Security disability benefits.
Reality
Usually social security disability benefits can be regarded to be of low to moderate level on the list of earning and hence not much can be expected. In addition, the average monthly benefit is much lower than what most people tend to believe and even qualifying to these benefits can be quite cumbersome. The disastrous dependence solely on security benefits is certainly avoided. Social insurance is actually useful in this respect.
Myth 6: Everyone Is Covered
Some individuals believe that all types of disabilities are automatically insurable under those policies of disability insurances.
Disability insurance policies must have a stated definition of “disability,” which may not include certain aspects, such as mental illnesses or even particular disabilities. Certain conditions might focus on disabilities that cannot wait to be treated at any given time. It is important that these people pay careful attention to the terms and conditions of the policy in order to know what the policy covers and what it does not cover.
Myth 7: I Do Not Need Disability Insurance At This Age And Can Wait Until My Older Years
This is a misconception that many individuals hold that includes the idea that there would be more responsibilities or even that there are unnecessary risks at the moment to justify the purchase of disability insurance.
Reality
Disease or ill health can make a disability insurance policy difficult to come by especially in old age when reaching for coverage is a must due to a premium increase almost everywhere. In fact, the correct age to secure disability insurance is before adulthood when favorable policies are abundant. One view of disability insurance that is valid and helps many people is that it should be integrated into the overall financial strategy as soon as possible.
Myth 8: I Do Not Need A Policy As I Have Enough Savings And I Can Get By With My Savings Alone.
Reality
Having savings is very important yet having them alone in case of some long-term disability may not be the best option. Even simple aspects like medical attention, mortgage or loans and other day to day needs can consume savings very fast, especially when the period of disability goes beyond one year. Disability insurance acts as a replacement so that these savings can remain untouched for emergencies rather than being the only source of income.
Myth 9: If You Have Health Insurance You Don’t Require Disability Insurance
This is a blood-curdling myth which many individuals tend to have. Many individuals believe that health insurance if availed will take care of any disability type needs.
Reality
Health insurance covers costs below the level of income, provided the individual is forcefully inactive or has an injury or illness. However, Health insurance does not cover the loss of income. Therefore, if a working person has a disability and is unable to work, then Health insurance does not cover their lost income. On the other hand, disability insurance is there specifically to cover lost income and assist the individual till recovery is achieved.
Myth 10: To Apply for Disability Insurance is Too Hard of a Process
Some people are ignorant of the availability of disability insurance altogether due to their preconceived perception of the application process that it is tedious.
Truth
The procedures for filing claims for some types of disability insurance might be complicated, but most insurance companies provide effective tools and directions that ease up on the claimant. Also, collaborating with insurance agents or other areas of financial practice has been a great way to situate options and make the claim process efficient. It is necessary to go through the available options for coverage instead of assuming that they are too complicated to use.
Summary
disability insurance is specifically suited with management strategies in handling the risks of loss and providing one with cover throughout bad times. Tackling these prevalent issues motivates us to take steps towards financial safeguarding by axing such routines. Individuals will benefit from having an understanding of the importance of disability insurance which has the sole purpose of protecting them against the unpredictable hurdles of life which may prove fortunate in the long run.
In view of the above facts, disability insurance should not be viewed as an insurance cover for the sick only but rather an integral part of every individual in need of financial assistance. Choosing the right type of policy means that an individual does not go unprepared no matter what goes down the line. Stop believing in misconceptions and take measures to protect your monetary resources today.