Is Your Financial House in Order?

Securing income protection for an unplanned disability is a basic financial necessity.

by Daryl Dagit, Savant Capital Management

“What did the doctor say?” A diagnosis of a serious illness can be life-changing. The need to understand treatment options and receive medical care is often overwhelming. A new diagnosis can affect not only your day-to-day routine, but also the people who are close to you. Finances can also be impacted. In fact, one of the areas a hospital support group asks patients to describe is their level of “financial stress.” 

Our Vulnerabilities
It’s human nature to think, “Nothing will happen to me; I’m fine.” But in reality, we’re all vulnerable and could experience a temporary or permanent period of disability that could leave us without the ability to support ourselves or our loved ones. Making sure you have enough disability coverage to protect your income from this type of event can be even more necessary than protecting against premature death.

I’m a numbers person, so admittedly I’m drawn to statistics that tell a story. The following numbers about women and disability came from a 2019 survey by the Council for Disability Awareness:

About 36 million women in the U.S. have disabilities.

One in four female workers will experience a serious work disability before reaching normal retirement age.

Fifty-two percent of all single, working women, ages 20 to 65, have no disability insurance at all, and of those who have it, only 55 percent say they have enough coverage.

We’ve long known that women have higher rates of disability throughout their careers than men, excluding pregnancy. But what is surprising is how few single women have income protection, and how few seriously consider it.

Protecting Your Income
What can we do about this? First, you need to carefully review your insurance needs including life, disability and property insurance. For disability coverage, our mantra has always been to check out the group coverage that is available through your employer first, before considering a private disability policy. Many employers offer some protection for little or no cost—don’t ignore this important benefit.

Make sure you are aware of the benefits the policy will pay. Is it short-term or long-term? You should be able to cover short-term expenses with your emergency savings account. Will it pay if you are not able to do the same type of work? Is it a taxable benefit, and when will the benefit expire? These are just a few questions you will want to answer before purchasing a policy.

Parents of young, full-time working daughters need to take this a step further. Talk to them about paying for disability coverage. Why would we remind them to pay for renter’s insurance for their “stuff,” but not talk to them about paying for disability insurance to protect their income?

Whether we are young or old, single or married, securing income protection for an unplanned disability is a basic necessity and part of getting our financial house in order. PM

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