Disability Insurance Analysis: Who needs it? Why is it important?

I sell a lot of life insurance policies. That is not a topic my clients enjoy discussing, but they recognize the need for it. No one wants to think about their own death.

Even fewer people want to think about being disabled due to accident or injury and unable to continue in their chosen career.

There are many misconceptions about disability insurance. The most common one I hear is that disability insurance is not needed because it’s a benefit provided by the federal government. There is a kernel of truth to that belief. The government will provide you with benefits if you become totally disabled. The issue with relying on the government is three-fold.

1.) It takes a long time to begin receiving benefits.  The process takes months and requires extensive documentation.

2.) The benefits are limited. You will likely not receive anything in the neighborhood of your previous salary.

3.) Eligibility for benefits is limited. You can find a summary of requirements from SSA here.

In short, it will take a long time for you to qualify for federal benefits and the bar for qualification is high. During that time period, income is not coming in and bills are piling up.

What about your employer? Many firms provide some disability benefits for their employees. A lot of these benefits are better than what they would get from federal disability. The problem is, the benefits generally expire at a certain point. Your law firm might really like you, but they’re not going to keep paying a portion of your salary for years if you have a traumatic brain injury in a car crash and can no longer work as an attorney.

In short, disability insurance is even more unpleasant to think about than life insurance. I think that is because for your family’s budget, a debilitating accident or injury is even more devastating than death.

The good news is, there are very good policies that are affordable and can keep your family afloat in the event of disability. There are even special riders that allow you to receive benefits if you are able to work, but can’t work in your chosen profession. For example, a surgeon who loses several fingers in an accident will be unable to do surgery, but she could still work as a teacher. Sadly, teachers don’t get paid as much as surgeons. If her mortgage is dependent on her previous salary, that could become a major problem.

The policies I sell can help that former surgeon continue to collect disability payments with a “True Occupation” rider. If you do specialized work that could be impacted by a major illness or injury, a disability policy is essential to have in your filing cabinet.

Another common objection I hear is, “I don’t want to pay these premiums and then never have to use it.”

I argue that this isn’t the point. Never needing the policy is a “win” because you have your income from working in your chosen profession. Nonetheless, I can also build a return of premium rider into your policy that gives you a portion of your premiums back after you have protected your highest-earning years.

In conclusion, you have worked your entire life to put yourself in a position where you can provide a great life for your family. If an accident or illness takes away your ability to work in that profession, you should have disability insurance in place that can help your family weather the storm. I can build a customized disability policy that fits your needs and occupation.

Dr. Rudolph Lurz is a former teacher and football coach with over a decade of experience in education and a doctorate in Administrative & Policy Studies. His insurance firm offers options from numerous national carriers such as AFLAC, AIG, Americo, Mutual of Omaha, John Hancock, Foresters, Prosperity Life and Athene Annuities. He lives in Roanoke, VA with his wife, daughter, and cat. He can be reached at lurzinsurance@gmail.com or with a text/call at 540-520-3069.

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