A disability isn’t always caused by a devastating accident or illness. It can mean a health crisis that takes away your ability to earn a living as you always have. That was the case for Alysia Lim’s father. An aneurysm, and resulting surgery to address it, has made it impossible for him to continue working as an emergency room physician. But Dr. Lim had prepared for the unforeseen with adequate amounts of insurance, including disability insurance.
Now he works as a professor at a local college, but his drop in salary has not changed the way the Lim family lives. His disability insurance has supplemented his income, allowing the Lims to stay in the dream house they built and to maintain their lifestyle.
This lesson hasn’t been lost on Alysia. She had thought her dad overprotective when he would mention that if anything were to happen to him or Alysia’s mother that the kids would be taken care of with the help of insurance. Alysia admits that her dad was right. “It’s a good thing he planned ahead,” she says, and adds that now she really understands the importance of preparing “for whatever may happen.”
The rate of disability among working women in the United States has grown almost twice as fast as the rate among working males during the past decade (over 60 percent and 32 percent, respectively), according to Social Security Administration data. Yet half of women (51 percent) are unprepared to cover their living expenses for three months or more should an accident or injury leave them unable to work, according to the 2008 Worker Disability Planning and Preparedness Study, conducted by the Council for Disability Awareness (CDA).
Two-thirds of Americans are living paycheck-to-paycheck*. This makes the consequences of losing income serious for most workers and their families. The ability of women, in particular, to cope with the financial impact of disability may worsen as household credit card debt is at an all-time high—averaging close to $10,000—and personal savings rates are at an all-time low. To make matters worse, women tend to save less than men, according to the Bureau of Labor Statistics.
“With disability on the rise for both men and women, it’s clear most Americans need to better prepare for an income-limiting disability. But this is especially appropriate for women who are experiencing even higher rates of disability while, in general, being less prepared than men,” says Barry Lundquist, president of the CDA, a nonprofit organization focused on helping the American workforce become aware of the growing incidence of disability.
Financial risks of disability can be severe and long lasting.
Disability is one of the leading causes of personal bankruptcies and mortgage foreclosures in America. During a disability, your ability to earn an income may stop, while increased medical bills and ongoing living expenses can quickly deplete savings and other resources, such as retirement and college savings.
“Workers, and in particular women, who haven’t discussed how they would financially manage their financial affairs if a disability arises should begin to realistically think through what would happen if they were unable to work and earn a living,” Lundquist explains. “Creating a disability financial plan should follow—one that helps estimate the impact that disability would have on personal expenses and where income would come from.”
Lundquist encourages all workers to understand their workplace sick pay and disability benefits. He explains that healthy lifestyle habits like seeing a doctor each year and quitting smoking can pay dividends, because leading a healthy lifestyle can reduce the likelihood of becoming disabled in the first place. “Disability planning and preparedness is critical, especially for working women,” he says.
For more information about the survey and for tools and tips on how to financially prepare for disability, visit the Council’s Web site www.disabilitycanhappen.org.
* Parade Magazine, 2008.
Without hesitation, many people believe that their greatest asset is their home, or their retirement savings. Neither is correct. To be clear, your greatest asset is your ability to earn an income, that is, to make money and bring home a paycheck.
In a nutshell, my job is to help my clients protect their paycheck. My role is to solve a problem, and in this case, risk is their problem. We facilitate the transfer of risk. As I tell my valued clients, “let’s face it, your greatest asset desperately needs to be protected…” It is the foundation on which all of their hopes, dreams and aspirations are built. Without this type of “paycheck protection” coverage, it leaves them vulnerable financially. Continue reading
While most people don’t think twice about insuring their cars and homes, they often leave one of their most important assets unprotected—their paychecks. Working Americans rely heavily on their paychecks to support their families and to fund their everyday living expenses, but few consider how their lives would be affected if they were unable to work due to an illness or injury and couldn’t bring home a paycheck. Ask yourself: Could you afford to live without your income?
“Your paycheck is clearly one of your most valuable assets. Just as you insure other valuables in your life, such as your home or car, it is crucial to insure your income,” says Garrett Wheeler, a disability insurance (DI) expert with Guardian in Honolulu, Hawaii. “Think of disability insurance as insurance for your paycheck. It provides an income if you’re unable to work due to an illness or injury.” According to the LIFE Foundation survey, nearly 50 percent of working Americans say they would not be able to make it a month before financial difficulties would set if a disability were to keep them out of work. More than one in four say they would face financial problems immediately. Continue reading