“What if…?”: A Question of Disability Insurance

Imagine: what if you could not be an attorney? It takes years of education, training, and commitment to practice law. It takes just as much to build your lifestyle. Yet, one moment, whether due to an accident or illness, can derail or severely alter all that you have worked for through those years of dedication. It is easy to think “it won’t happen to me” regarding forces completely out of your control— until it does.

What is disability insurance and who needs it?

• One in four¹ non-elderly Americans suffer financially from unaffordable medical bills.
• The Social Security Administration has found that, 25% of 20-year-olds today will become disabled before reaching the age of 67.²
• Even with the risk of developing a potentially life altering disability so high, only 20% of people own disability insurance.³

Disability insurance helps to protect the insured’s income should they develop a disability, either an injury or illness, that prevents them from working for a period of time. The money that is disbursed on a monthly basis from this policy can go toward paying bills and/or daily living expenses that may be difficult to manage without a steady income for the duration of the insured’s disability. Coverage does not replace 100% of the insured’s income, however insurance policies do pay a high percentage, generally 60% but could be as high as 70%.  

What does it mean to be disabled?

One of the most important considerations when evaluating policies is how disability is defined. Each policy may define ‘disability’ differently, which will directly impact how and when the benefits are paid out. The Americans with Disabilities Act (ADA) defines an individual with a disability as “a person who has a physical or mental impairment that substantially limits one or more major life activity.”⁴

There are three types of disability insurance policies:

• Own occupation. Offers more broad coverage.
• Reasonably suited. Mid -level coverage in both what it offers and its premium pricing.
• Total disability. Typically the least expensive type of policy.

Most group policies are the latter two options, Reasonably Suited and Total Disability. A feature you will want to look for is called “own occupation.” In other words, the policy considers you to be disabled (with some other stipulations, such as the inability to do certain activities of daily living) when you cannot do your exact job, not just any job. It is also important to consider a Residual Benefit that would continue to provide a benefit if you can work part time.

Disability insurance can be complicated.  In addition to how disability is defined, there are multiple benefit periods, waiting periods before benefits begin, cost of living riders, etc.

What does my New York State Bar Association membership offer me?

As a member of the NYSBA, Group Long-Term Disability Insurance solutions are available through the NYSBA Insurance Program to help you continue saving for your retirement and protect your assets. Although there are many options to customize a plan to fit your needs and budget. Learn more about your disability insurance options here.

 

Resources:

¹Hamel, L., Norton, M., Pollitz, K., Levitt, L., Claxton, G., & Brodie, M., The Burden of Medical Debt: Results from the Kaiser Family Foundation/New York Times Medical Bills Survey, April 12, 2016.

² U.S. Social Security Administration, The Facts about Social Security’s Disability Program, January 2018.

³ 2017 Insurance Barometer Study, Life Happens and LIMRA, 2017.

⁴ Americans with Disabilities Act National Network, What is the definition of disability under the ADA?, n.d