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Disability Insurance
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Do I Really Need Disability Income Insurance?

What are the chances I will become disabled?
Won't Social Security cover me if I become disabled?
What do I need to do?

Of course you only need disability income insurance if you actually become disabled between now and when you retire, but before you decide to take your chances consider the following.

What are the chances I will become disabled?

Did You Know? (2007)
Event Frequency
Home fire 1 out of every 88 homes
Serious auto accident 1 out of every 70 autos
Death 1 out of every 106 people
Disability 1 out of every 8 people

"The chances of becoming disabled are probably greater than you realize. Studies show that a 20 year old worker has a 3-in-10 chance of becoming disabled before reaching retirement age." - SSA.gov, 4/7/04

...whereas, that same 20-year-old has only a 17% chance of dying before age 65. - Table 10. National Vital Statistics Report, Vol. 47, No. 28, 12/13/99

Chances of becoming sick or hurt for three months or longer are:

Age 30 42% chance
Age 35 41% chance
Age 40 39% chance
Age 45 36% chance
Age 50 33% chance
Age 55 27% chance
Illinois Mutual, 9/1/03

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Won't Social Security cover me if I become disabled?

Social Security disability claims can take an extremely long time to be processed and the application that is approved upon submission is the exception, not the norm.

To receive disability, a state agency of the SSA must first review the claim in a process taking an average of three to four months. Approximately 65 percent of the 2.5 million people filing disability claims each year are denied at first, until appeals are heard by federal administrative law judges. 62 percent of appeals are ultimately approved, but average waits for hearings range from an additional nine months (Harrisburg, PA.) to 31 months (Atlanta, GA). Source: http://www.efmoody.com/insurance/disabilitystatistics.html

48% of all home foreclosures are the result of disability, while only 3% of foreclosures result from death. Source: Housing and Home Finance Agency of the U.S. Government, 1998.

Most People have savings to cover less than six months of expenses. Source: Business Almanac, 1997

More Factors to consider about disability income insurance coverage: (Tony Steuer), Nearly half of the 1 million Americans who filed for bankruptcy protection last year did so after being sidelined by an unexpected illness or injury. Source: New York Post, April 3, 2000; “There’s no insuring you won’t go bankrupt”.

A Census Bureau study found that a typical 35-year-old making $50,000 a year had enough savings on hand to cover only two months of expenses. Yet most disabilities last 90 days or longer, and more than 1.5 million Americans are considered permanently disabled and unlikely ever to return to work.

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What do I need to do?

Step 1: Analyze the needs of you and your family if you were to become disabled.

Step 2: Assess your assets. What assets do you have that you could use to get you by on until you could get back on your feet?

Step 3: Evaluate your situation.

Step 4: Get covered.

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