Many individuals believe because they work at a non-hazardous job they needn’t worry about disability insurance. Should an injury or a lengthy illness occur, they assume their employer’s disability insurance plan will cover their needs. Nothing may be further from the truth. 43 percent of workers over the age of 40 are likely to require disability coverage at some point in their working lives, and according to the Council for Disability Awareness, the average long-term disability absence from work is 2.5 years. Unless the worker has adequate disability coverage, they may find themselves in financial ruin.
There are two types of disability insurance: short-term and long-term. Typically, short-term disability lasts 3-6 months, while long-term begins 3 months after the disability has occurred. It may last until the individual retires.
Should the disability be short-term, the individual may not have any coverage at all. In the state of Florida, businesses are not required to offer short-term disability insurance or compensation. Therefore, it falls to the individual to ensure they are adequately prepared for any short-term disability. Short-term disability may be defined as any impactful physical injury that prevents the individual from working such as back injury, broken bones or heart attack. It may also include some diseases or psychological impairments.
Long-term disability insurance is required for Florida workers but may fall woefully short in providing adequate compensation to meet a current standard of living. Reliance on Social Security disability will only apply if an individual’s estimated absence from work exceeds 12 months. Additionally, Social Security has rigid requirement rules as to what qualifies as a disability.
The advantage of purchasing additional disability insurance is the ability to shape the coverage as the individual requires. This can take the form of determining a specific monthly benefit amount, length of time the benefits will be paid or how quickly the benefits start. These factors help determine the cost of the policy.
In addition, it isn’t necessary to be totally disabled to receive benefits. If the individual is working but has experienced a 20 percent or greater loss of earnings while remaining under a physician’s care, then a partial payment will be made. This is termed a residual disability.
Having the proper insurance coverage is critical whether the injury or illness is short-term or long-term. Just as no two injuries or illnesses are alike, no two disability insurance policies are alike. It’s best to determine beforehand exactly what the individual needs are to ensure the policy is crafted to specifically cover those needs.