Life Disability Long Term Care

Disability Income Insurance

Can You Afford to Overlook It ?

When someone says "insurance", what comes to mind? With all the headlines about health care, you may think of medical insurance. Or your homeowners or car insurance. Or the tried-and-true foundation of most financial plans, life insurance. After all, the need for life insurance is so easy to understand, and other types of insurance protection are so essential for protecting against the accidents - and occasional calamities - of everyday living.

So if you're like most people, disability insurance comes way down the list. But unfortunately, the last insurance you think of could well be the first insurance you need.

Disability - a fact of life

No one likes to think about it, but the chances of becoming disabled are actually much greater than the chances of dying until quite late in life. The table above shows how much greater. In short, that means your need for disability insurance is even higher than you need for life insurance.

But why protect against disability at all? Because the financial consequences of disability can be devastating to a family's lifestyle - even more devastating than the death of a breadwinner. Consider just one statistic: according to a 1989 Government Housing and Home Finance Agency report, 3% of all mortgage foreclosures are caused by death, while 48% of all foreclosures are the result of disability. The reason for this difference: many more people have protected themselves with life insurance than with disability insurance.

Asking the right questions

Here's a valuable exercise you can perform right now. Rough out your family's current monthly living expenses. Then, in the next column, trim as many of those expenses as you can to determine your minimum cash needs in the event of a disability. If yours is the sole income, how long could your family meet expenses before savings were used up?

Chances of becoming disabled for 90 days or more vs. the chance of death:


Chances of becoming disabled


7-1/2 times greater


6-1/2 times greater


4-1/2 times greater


2-3/4 times greater


2 times greater

Source: Commissioner's Standard Ordinary Disability Table

If you have a spouse who works, could his or her income alone meet these expenses? Would you still have to give up saving for college expenses or other important, long-range goals in the process?

As you can see, disability poses some difficult questions. But because it's a topic that people usually avoid, the question too often goes unanswered. So especially if you've never considered disability insurance before, you owe it to yourself and your family to learn more. Your insurance advisor can help you analyze your specific income replacement needs and recommend a plan to meet them.