Disability Awareness Month

By Aviva Sapers

Are you aware of the financial impact a disability can have for you and your family?

You have around a 25% chance of becoming disabled for three months or more before the age of 65.* The average duration of a disability ranges from 2.1 years to 3.2 years, depending on age.** A 2019 study found that 44.3% of personal bankruptcies were the result of medically-related work loss.***

These statistics are not meant to be alarming but should be a wake-up call to take actions that can help safeguard you and your family from the potential financial risk of a prolonged disability leave—without disrupting your lifestyle.

Many executives are unaware of how much disability income coverage they receive through their employer. Most people assume they have coverage at 60% of pay. However, it’s important to note that many benefit plans have a maximum cap of 10k/month or 15k/month, and often they don’t include bonuses or commissions.

Consider this real-life scenario: If an executive earning $500k were to become disabled, he or she might only receive a $15k/month benefit, which would cover $300k of pay. In addition, group plans are often designed so that the disability benefits are taxable to the executive when received—effectively cutting net benefit to about 40% of pay.  Could you or your family live on this if you became disabled?  Do you have an option to choose a tax free disability benefit?

This Disability Awareness Month, we strongly encourage you to learn more about your level of coverage and understand its limitations. Supplemental plans can be added to your disability coverage, including options to amend your existing contract to make the payouts tax-free.

Contact us to ensure you have the coverage you need to give you the peace of mind you deserve. We are here to listen, advise, and help.

*Joe Palmer, “40 eye-opening disability statistics to know in 2023”, breeze.com, September 6, 2021.

** Joe Palmer, “40 eye-opening disability statistics to know in 2023”, breeze.com, September 6, 2021. *** David U. Himmelstein, Robert M. Lawless, Deborah Thorne, Pamela Foohey, Steffie Woolhandler, “Medical Bankruptcy: Still Common Despite the Affordable Care Act,” American Journal of Public Health 109, no. 3 (March 1, 2019): pp. 431 – 433. See Table 1. Free access available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6366487/


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