Disability is not something most people likes to think about, and in fact many Americans donâ€™t adequately plan for it by purchasing disability coverage. This is unfortunate, because the risk of becoming disabled during oneâ€™s working years is not insignificant.
According to the Council For Disability Awareness, over one-quarter of 20-year-olds will become disabled prior to retirement, and over 50 percent of disabled people are between the ages of 18 and 64, their working years. In fact, one is more likely to become disabled in oneâ€™s working years than to die, although Americans generally have an easier time justifying life insurance.Â
No doubt, one of the reasons many Americans choose to forego disability insurance is the belief that they will be able to qualify for Social Security disability benefits when they need them. The truth is that this is not always the case. Althoughâ€”according to the Council for Disability Awarenessâ€”over five percent of American workers were receiving Social Security disability at the end of 2012 and over 2.5 million disabled workers in their 20s, 30s and 40s were receiving SSDI, it is not necessarily easy to qualify.
In order to qualify for SSDI, one must have a disability or combination of disabling conditions which render one unable to earn a minimum monthly amountâ€”currently $1,800 for the blind and $1,070 for the non-blindâ€” and which is serious enough that it is expected to last at least one year or to result in death. One must also be unable to perform any work. Many people are just not going to fall into this category and will still need income replacement.
To be sure, those who become disabled and lose their ability to work should keep in mind the possibility of qualifying for SSDI, but even more important is to plan for the possibility that SSDI will not be available.
Source: Wall Street Journal, â€œWhy Young People Need More Disability Insurance,â€ September 25, 2014.Â