I am medically disabled, hopefully temporarily. My incentive for writing this is to educate people. I am not an insurance salesman, and the fact is, I don’t fully trust insurance salespeople. Fortunately, I already have a life insurance policy, and I had the good sense to buy disability insurance, so I am getting by. So here are some things to think about, even if you are in your 20’s and at the prime of your life.
- Everyone, at some time in their lives, will die or become disabled. According to Cornell University, in 2006, the overall percentage of working-age people (21 to 64 years old) with a disability in the U.S. was approximately 13 percent. You have roughly a 1 out of 8 chance of becoming disabled before reaching the age of 64.
- The younger you are when you get insurance, the lower your monthly premiums will be. Insurance is all about statistics. The insurance companies know the exact statistical likelihood of your dying or becoming disabled, and your insurance rates are based on those figures. As you grow older, trying to get insurance will cost you much more. Even if you have coverage through your job, it is only temporary. When/if you lose your job, you end up having to pay the premiums yourself, including the amount your former employer contributed. But if you already have insurance, those premiums, depending on the kind of policy you have, won’t go up significantly. Monthly premiums for a person over the age of 70, who wants a new $5,000 life insurance policy for funeral expenses, can easily pay $150 each month until they die. Consider paying that amount each month while you are on Social Security!
- If you ever become ill, it will be nearly impossible to get affordable insurance. Ever look at an insurance application? One of the first things they require is a list of all medications you are on, whether or not you have ever been hospitalized, and why. It doesn’t matter if you were hospitalized to have your appendix or gall bladder removed, you are now considered a higher risk, even though you can’t have the same operation ever again. If you admit to ever having been depressed, your rate will go up because your risk of suicide is higher.
- Will Social Security be around when you are older? People often talk about whether Social Security benefits will still be available when they are at retirement age. Most people are doubtful. But how many people take into consideration that Social Security Disability falls under the same umbrella?
- What if you die without a will? Funeral costs range between about $2,500 up to $15,000. Who is going to pay this? If you are the major bread-winner of the family, your loved ones are certainly going to suffer long after your funeral. Even if your disability is short term, the amount of disability income you can expect from the state and federal government won’t make up for the lost income.
Nobody likes to think about death or disability. We all hope to go through life, happy and in good health, with plenty of money to retire on. But the odds of that happening are not as good as you might hope. You can’t look into the future to see how your life will turn out, but you can be prepared for the inevitable.