Disability Insurance for the Business Owner
They say a picture tells a thousand words. How about a thousand numbers paints a picture?
Statistics matter. They are figures compiled from real life scenarios.*
• 1 in 8 workers will be disabled for five years or more during their working careers.
• Over 37 million Americans are classified as disabled. More than 50% of those Americans are in their working years, from 18 – 64.2.
• 90% of disabilities are caused by illnesses vs. accidents.
*Statistics are from the Council of Disability Awareness
Most parents, families, business owners worry about their family’s fate in the event of death, but most do not consider what will happen in the event of disability. Disability has many variables that determine if a company will issue a policy. As a result, it should be the first type of policy you consider when you start earning a living.
You should be considering disability insurance if:
• You have a career/business/job.
• You pay bills from the income you earn.
• You don’t have enough savings or retirement to cover those bills if you lose your job.
• You own a business with overhead expenses.
Disability insurance depends on variables such as:
• Health – Underwriters review doctor’s records to determine health.
• Gender – Women are more expensive than men when it comes to disability insurance vs. life insurance.
• Age – It should be discussed at what point it may not make sense to purchase disability since it is only payable to age 65.
• Occupation – There are job classifications that are more expensive than others and some that are uninsurable. Ex. Contractors are a higher risk to insure compared to a accountant.
• Reported income – Most carriers do not insure more than 60% – 70% of your reported income. It’s considered a moral hazard if insurance companies insure 100% of your income. This means it’s more attractive to be disabled and collect all of your current income level than work for a living.
If your occupation precludes you from securing an individual policy in the open market due to your occupation, you may want to consider enrolling yourself in the state mandated Workers’ Compensation and Disability coverages. These policies are required when you have W2 employees. If you have no other insurance coverage, this will help to provide some protection to pay your medical bills.
Yes, there is Social Security Disability, but be forewarned, if you even qualify, it is an arduous process that takes an extraordinary amount of time before they start disbursing checks. You may want to consider discussing with your agent how this could affect you..
Call your agent now to discuss your options.