Consumer advocates and personal finance experts are trying to educate the public about its importance.
For most people, throughout their working lives, the financial security of their family is based on their current income and not an asset that has already achieved its full value, making long term disability insurance a highly valuable and yet greatly overlooked element of any personal finance strategy.
One of the most devastating events to a family’s finances is a disabled earner who cannot continue to work.
This is the case at any point in an individual’s life, especially among families that live from month to month or from paycheck to paycheck. For this reason, consumer advocates and personal finance experts are trying to educate consumers regarding the vital importance of disability insurance, which would pay them a set amount of the income of a family member should he or she become disabled through injury or illness and be unable to continue earning.
According to the Social Security Administration, among the 20 year olds of today, more than one quarter will experience a disability before they turn 67 years old. Sun Life Financial data shows that there is a three times greater likelihood of a disability that will last a year before an individual turns 65 than there is of death.
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Every individual has a certain level of vulnerability, and protection is required in case a disability should occur.
Every financial plan should ideally include some disability insurance to take care of those times when an income is cut off due to illness or injury. For many people who work for larger companies, this will frequently be subsidized by the employer as a part of the benefits. However, this still means that only three in every ten Americans receive this coverage through their employers.
The coverage provided by a long term disability policy will usually begin when an injury or illness causes you to have to take time off work for a period of three months or greater. The standard payment from one of these policies is around 60 percent of the average income of the individual. Though this is not a complete replacement of the income that has been lost, it is certainly much more helpful than none at all and will often be enough to allow a household to get by until the time when an income can be restarted.