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March 11, 2014

Better Off Dead?

Well, of course not! But if you are ever unfortunate to have such a disability or illness; the stress of covering your bills in addition to dealing with your personal wellness can make you feel that you would be “better off dead”. Fortunately, a simple disability policy can protect you from this stress and does not have to break the bank.

I often find that many of my customers carry term insurance quotes for seniors over 65 to protect their families in the event they were to die; but far fewer people think about how to handle the possibility of extended disability due to accident or illness.

According to the Life and Health Insurance Foundation for Education, 1 in 3 workers will miss at least 90 days of work, and 1 in 5 will be out of work for a year or more before the age of 65. Disability insurance is designed to cover your expenses when you are out of work and for that reason many refer to disability insurance as “paycheck protection”.

So there are two questions you will want to answer in order to get started.  First, how long would your existing savings cover you?  Second, what are the monthly expenses you need to cover?  You want to make sure you cover all critical expenses such as mortgage, utilities, car payments, etc.

If you have cash in the bank to cover your short term needs;  you may elect to forgo a short term disability policy.  These plans typically cover the first 2-6 months of the disability.   Any time beyond that requires a long term disability policy.

Now I know many of you are saying “Doesn’t my employer cover that?”.   As of 2006, the New York Disability Law, or “DBL” as it is commonly referred to; offers a benefit of 50% of weekly wages to a maximum of $170 per week of benefit ($340 per week of covered salary). The normal waiting period for DBL benefits to start is seven days, and benefits can extend to a maximum duration of 26 weeks.

It is possible for carriers to offer benefits that extend beyond the statutory DBL coverage known as “enhanced” or “enriched” DBL. This extended coverage usually takes the form of a higher maximum benefit, but can also include shorter waiting periods or a longer maximum duration. Carriers take these factors into account when underwriting DBL coverage, and so enriched DBL is often more costly than statutory DBL coverage.

If you would like some help reviewing what coverage you have currently, or what your options might be to add your own coverage; please give us a call at Kaplan Insurance.