Did You Know:
Over 25% of those 20 years old today will experience a disability lasting at least one year before retiring at 65.
The chance of a disability lasting at least three months, by age… Age 35/22%, Age 40/21%, Age 45/20%, Age 50/18%.
Disability and Financial Devastation
Reasons given for filing bankruptcy: Medical bills (26%,) Lost Job (20%,) Illness or injury of applicant or family member (15%.)
Two thirds of individuals cannot make it six months before financial troubles arise, and 14% would have immediate financial troubles if disabled and not able to work.
For those between the ages of 18-64 that had a serious illness in the past, 42% used most of their savings, with nearly 30% not having enough for food or housing.
Cost of Not Having/Having Disability Insurance
Not having disability insurance can lead to financial ruin as we all know. The family suffers from financial strain. Possibly the family has to move to lower their mortgage or rent payment. There is also the psychological effect of watching the family’s net worth dwindle. The worst part is that expenses typically go up during a disability, right when income and net worth are declining.
Having a disability insurance policy comes with costs as well, of course. The premium depends on how much coverage is purchased. A decent policy will cost about 2%-3% of annual income.
The cost of not having coverage can be devastating, while the cost of having coverage is trivial when a disability occurs.