Litigation

Disability Insurance is Critical Defensive Financial Planning

By John Darer

A new study released May 18, 2009 by the LIFE Foundation and America's Health Insurance Plans (AHIP). looks at the consequences facing individuals who become disabled and can't work, and the level to which various types of disability income protection can help to reduce the financial impact. The findings reveal that in the absence of insurance, a majority of Americans would likely have to make difficult financial decisions, or even drastic lifestyle changes, in order to cover the costs associated with disability, regardless of whether the disability is short- or long-term.

Lawyers and settlement professionals are used to evaluating economic losses for their clients ought to mindful of the exposure that they themselves may have to long term disability.

The aforementioned study, which was conducted by Milliman examined four representative scenarios of newly disabled individuals, finding, for example, that the financial impact of a disability - equal to lost income plus expenses - to be as high as nearly $1 million for a 40-year-old, single male earning $50,000 per year who suffers a long-term disability lasting until age 65 - nearly 20 times his pre-disability earnings. The study also showed that the costs associated with short-term disabilities can be quite significant - equaling one to nearly two times income in some cases for a disability lasting just two years.

As a result of the recession, many Americans have less savings and investments to fall back on should they become disabled and can't work. According to a recent national survey conducted by LIFE, more than a 27% of Americans admit they would begin having difficulty supporting themselves financially "immediately" following a disability, while 49% would reach that point within a month.

Disability Insurance provides a financial backstop to replace lost income if you were suddenly out of work due to sickness or injury. In 26 years this author has significant experience placing disability insurance in addition to seeing the difference it can make in a person's life who, due to life's misfortunes, has to use it.

A variety of disability forms are available to cover income on an individual or group basis, to cover overhead expenses to keep a practice or partnership running, disability buyout insurance and more. There are also specialty DI policies to cover high income earners.

For further information on disability insurance and to assess your exposure please contact John Darer at 888-325-8640.

Full post as published by Structured Settlements 4Real on May 18, 2009 (boomark / email).