The U.S. economic downturn may have come to an end, but the lessons learned by workers – including the value of a paycheck and the importance of protecting their finances – will reverberate for years. As workers strive to safeguard their incomes, an insurance product that warrants serious consideration is short term disability. After all, just over 1 in 4 of today’s 20-year-olds will become disabled before reaching age 67.1
Given the frequency of disabling accidents and injuries, you’d think that Americans would be diligent about setting aside funds for a rainy day. However, most aren’t that practical or that flush with cash. According to the 2015 Aflac WorkForces Report, 52 percent of American workers have less than $1,000 on hand to pay out-of-pocket expenses associated with an unexpected serious illness or accident.2
Short-term disability insurance is one of many voluntary insurance policies available to help workers cope with out-of-pocket costs associated with serious accidents or illnesses - costs major medical was never intended to cover. In the event of a physician-documented disability, participants receive cash benefits that can be used to help pay for daily living expenses, such as the mortgage or rent, gas, groceries, utilities and other necessities.
It’s important to note that workers who become disabled may lose more than their ability to earn a living: They may also lose savings, retirement funds or even their homes. Disability insurance plays an important role in financial planning and safeguarding their financial futures.
The need for disability insurance protection is crucial, particularly among primary wage-earners. Because disabling injuries or illnesses often lead to significant medical bills, anyone who works - whether they are single, married, with children or without – should consider voluntary disability coverage.
Employers should consider adding employee paid short-term disability coverage to their benefits options because by doing so they’ll give their workers increased peace of mind. Disability insurance helps protect workers from financial ruin with:
Although many workers assume they are protected by employer-paid disability coverage, a growing number of companies have cut back on the benefits they offer. A decade ago, it was commonplace for a company’s internal disability plan to pay an employee 70 percent of income if disabled, but workers today usually receive much less.3
Furthermore, many people assume they will receive benefits from Social Security or workers’ compensation. However, that is often not the case. Between 2003 and 2012, the percentage of applicants awarded Social Security benefits at the initial claims level was just 24 percent.4 What’s more, the average monthly Social Security benefit paid to disabled Americans in 2014 was only $1,165.1
As for depending on workers’ compensation to cover a disabling injury or illness, employees should consider that 95 percent of disabling accidents and illnesses are not work related, meaning workers’ compensation doesn’t cover them.5
The bottom line is that weathering an economic recession has opened Americans’ eyes to the value of voluntary short-term disability insurance.
Companies and their employees are recognizing the financial vulnerability that comes from being unprotected and underinsured. Neglecting to secure disability insurance is a prime example of how saving a few dollars in the short term can cost thousands in the long run.
A real-life experience
My name is Richard. I’m an active and healthy 56-year-old — or at least I thought I was. I would like to inform anyone out there who might be considering applying for an Aflac short-term disability insurance policy to please listen to my story.
About six months ago, I had an injury to my sciatic nerve, just simply from bending over and turning. It dropped me to my knees. After a couple of weeks and several doctors’ visits, I was able to go back to work. Not really understanding the severity of my injury, I kept working, walking and doing whatever I had to do to live. Within the next two months, I had rendered myself unable to walk. After yet again several visits to doctors and hospitals, I was unable to work for two months.
If I didn’t have short-term disability through my work, I would have put myself and family through some rough times. Thank goodness for my Aflac policy. Actually, we would have probably lost our house. Two months without income is devastating. You really have to sit back and think about it; for a few extra dollars a month, trust me what a difference it makes, and it is well worth its value.
Once again, I would like to say that if it wasn’t for Aflac insurance, my family and I would likely have been in dire straits.
Richard Hyer, Florida, 9/1/16
This article is for informational purposes only and is not intended to be a solicitation.
1U.S. Social Security Administration, “Social Security Basic Facts,” accessed Nov. 13, 2015 – http://www.ssa.gov/pressoffice/basicfact.htm.
2The 2015 Aflac WorkForces Report, “Waste not, want not,” accessed Nov. 10, 2015 - https://www.aflac.com/business/resources/aflac-workforces-report/overview/waste-not-want-not.aspx.
3California Broker, “Disability Insurance: A necessity in today’s reality,” accessed Nov 13. 2015 – http://www.calbrokermag.com/october-2010-california-broker/#disability.
4U.S. Social Security Administration accessed Nov. 13, 2015 - https://www.ssa.gov/policy/docs/statcomps/di_asr/2013/di_asr13.pdf.
5CDA Council for Disability Awareness, “The 2011 Council for Disability Awareness Long-Term Disability Claims Review,” accessed Nov. 13, 2015 - http://www.disabilitycanhappen.org/chances_disability/disability_stats.asp.