383 Ridgedale Ave, 2nd Floor
East Hanover, NJ 07936
Mon-Fri: 8AM-5PM
Sat-Sun: Closed
CONTACT US

Disability

The Individual Need for Disability Insurance

Many people believe that their biggest asset is their home. For most of us, our biggest asset is the ability to work and earn an income. Not being able to work – due to a job loss or a disability having taken away the ability to work – is often financially devastating.

Everyone who works for a living is familiar with what can happen if they lose their job. On the other hand, the possibility of a serious disability is a risk few seem to consider. How likely is it that you will become seriously disabled? According to one study, 30% of all Americans between the ages of 35 and 65 suffered a disability lasting at least 90 days.1 The risk is real. The question is, “What to do about it?”

Don’t Count on Social Security

A few individuals do manage to qualify for disability benefits from Social Security. However, the Social Security definition of “disability” is so strict that, in 2019, only 36.9% of initial claims for Social Security disability benefits were accepted.2 Obviously, something else beyond Social Security is needed.

Group Disability Insurance

Many employers will provide – or make available – disability insurance on a group basis. However, even those who are covered by a group policy can still be at substantial risk. Employer-sponsored disability policies seldom replace more than 60% of your monthly salary. Further, many policies have a monthly maximum benefit that may be far less than what some people earn. Income taxes can also be an issue; if the employer is paying the full cost of the coverage, and not including it in the employee’s income, disability benefits are fully taxable. If an employee pays for disability insurance with after-tax dollars, the benefits are received free of income tax.3

Individual Disability Income Insurance

If group coverage is not available, the solution may be individual disability income insurance. Although individual policies can cost more, as long as you pay the premiums with after-tax dollars, the benefits are not taxable. Plus, an individual policy allows you to tailor its terms to fit your own needs. When shopping for an individual disability policy, consider the following:

● Company strength: You need to know if the company is financially sound.

● Definition of disability: Look for a policy that defines disability in the broadest terms possible. Some policies will permit you to work in a different occupation and still collect disability benefits.

● Elimination period: How long must you wait before disability payments begin?

● Benefit period: How long will you need coverage? Both short-term and long-term disability benefits are available.

● Inflation protection: Try to find a policy that adjusts benefits for inflation.

The Impact of Disability

While most Americans insure their lives and physical possessions such as their homes, cars, etc., many overlook the need to protect their most valuable asset – the ability to earn an income. How likely is it that someone will become disabled? The table below, developed using data collected by the federal government, shows the number of working-age Americans who have a disability that affects their daily lives.

Individuals with Disabilities by Age4

Income Down, Expenses Up

The graph below illustrates the problem typically faced by an individual who becomes disabled for an extended period of time – income decreases while expenses increase.

1Based upon the 1985 Commissioners’ Individual Disability Table.


2Annual Statistical Report on the Social Security Disability Insurance Program, 2021, November 2021. Table 61, Medical decisions at the initial adjudicative level, by year of application and program, all decisions.

 

3The discussion here concerns federal income tax law only. State or local law may vary.

 

4Source: U.S. Census Bureau, 2019 American Community Survey 1-Year Estimates, Sex-by-Age-by Disability Status for the civilian non-institutionalized population, male and female. Table B18101.

GET IN TOUCH

LET'S TALK

Getting started is easy! Simply fill out the form below and set up a meeting with one of our experienced team members. In this introductory call, we’ll discuss your financial goals and go over the materials we need from you in order to move forward.

Securities offered through Intervest International Equities Corporation, Member FINRA/SIPC

Advisory Services offered through Intervest International, Inc. an SEC Registered Investment Advisor

Intervest International Equities Corporation (IIEC) is registered to conduct securities business in all fifty states and the District of Columbia.

Intervest is licensed to sell insurance in all fifty states and the District of Columbia.

Intervest International, Inc. (III), Registered Investment Advisor, is registered with the SEC and has filed to do business in the District of Columbia and in all states except Vermont, and Wyoming.

Click here to download our Business Continuity Plan Disclosure Statement.

Click here to download our Privacy Notice. Finra Broker Check SPIC Logo
Copyright © 2023. Cornerstone Financial Partners & Associates, LLC.

EASY & TRULY AFFORDABLE EMPLOYEE HEALTHCARE

We are committed to helping you live your best life.

"*" indicates required fields

This field is for validation purposes and should be left unchanged.
I don’t like saving money.

Insurance

  • Disability Income Insurance
  • Life Insurance
  • Long-Term-Care Insurance
  • Property & Causality Insurance
  • Medical Insurance

Financial Planning

  • Individual Retirement Plans
  • Tax Mitigation Plans
  • Group Retirement Plans
  • College Plans
  • Estate Plans
  • Executive Benefit Plans
  • Profit Sharing Plans

Investments

  • Bonds
  • Common Stock
  • Educational IRA
  • Traditional IRA
  • Roth IRA
  • SEP IRA
  • Simple IRA
  • Brokerage Accounts
  • Treasury Bills
  • Government Securities
  • Treasury Notes
  • Variable Annuity