People often think of insurance in terms of auto insurance, homeowners insurance, and life insurance. People rarely think about disability insurance (DI), but it is an essential part of an individual’s insurance portfolio. It is very likely that someone will become disabled from an injury or illness during their working years. This means that 25% of the population could lose their income. But, people often see disability insurance as an additional expense and not as a way to protect their income. Let’s look at some of these myths that surround disability insurance. They relegate it to the bottom of people’s priority list for risk mitigation. If you are looking for quality disability support services anywhere and under any circumstances, you can find them on disability support services Melbourne.
33% of employees have some type of disability insurance through work. This coverage is usually sufficient for the 33% who are fortunate enough to have it. Many group DI policies have very strict terms and pay only if an individual is unable or unable to work in any job. For example, if a surgeon becomes disabled and cannot perform surgery but is still able to work in another profession, such as teaching, the group policy will not provide any benefit. Additionally, benefits paid by the employer to cover the premium are taxable income if they pay it with pretax dollars. Because DI policies pay between 60%-60% of a person’s gross salary, taxing the benefit could result in a drop in net proceeds of more than a third. Group DI policies are a poor alternative to individual DI plans because of both these issues. Sixty-seven percent of uncovered workers have no income replacement in case they are unable to work due to injury or illness.
The second myth is that death prematurely is more likely than losing one’s income and becoming disabled during one’s working years. Remarkably, there is a high risk of serious disability as a result of injury or illness. About 25% of people are at risk of being disabled from 20 to 67. Unum Insurance found that 60% of disability claims they receive are from women. This compares to the chance of dying young: about 17% for males between 25 and 64 years old, and approximately 11% for women in the same age group.
Another myth is that workman’s insurance and disability insurance are confused. The two products are totally different. The first is designed to replace wages or provide medical benefits for an injury or illness directly related to employment. DI covers wage replacement up to 66% for any illness or injury that restricts one’s ability to work for a long time. Only 5% are directly work-related and are covered by workman’s compensation. 95% of disability cases are caused by illnesses that aren’t connected to employment and are therefore not eligible for workman’s compensation. You have a better chance of getting a nonwork-related disability than being disabled from work. Workman’s comprehensive insurance cannot replace disability insurance.
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