Here are Some Common Misconceptions about Disability Insurance:

Misconception #1:  It’s not difficult to qualify for social security disability insurance benefits.

Fact: Fewer than 35% of the people who apply for social security disability benefits are approved.

Misconception #2: Everyone who works qualifies for social security benefits following a disability.

Fact: In order to be eligible for disability benefits, you must have worked at least 10 years in a job in which you paid into the social security system.

Misconception #3: Social security provides sufficient disability coverage.

Fact: The average social security disability insurance benefit, for those who are approved, is $722 per month.

Misconception #4: Employer-paid group disability policies are preferable to individual policies.

Fact: There are many drawbacks associated with employer-paid disability insurance, including the facts that coverage can be lost upon separation from employment and benefits received are taxable as income.

Misconception #5: All long-term disability insurance policies are essentially the same.

Fact: There are many significant differences amongst disability insurance policies, including the waiting period, length of benefits, and how disability is defined.

Misconception #6: Disability insurance isn’t as important as life insurance.

Fact: While life insurance is quite important, it’s not accurate to say that it matters more than disability coverage. It’s a fact that a 42-year-old adult is four times more likely to experience a disability during his or her working years than to die during the same time frame.

To get a free quote for disability insurance, click on the “Get Disability Insurance Quotes” button on the top or bottom of this page.

When selecting a supplemental disability insurance policy, it’s a good idea to choose a plan that includes residual disability coverage. It’s a fact that not every illness or injury results in a complete and total disability, temporarily or permanently. In many cases, people can experience a partial disability that doesn’t prevent them from working, but that do result in a significant loss of income. Partial disabilities can be temporary, but they can also last for a long time or even be permanent.

That’s why residual disability insurance is such an important feature. This type of protection provides insured individuals with money to make up for income loss following a partial disability. If your disability insurance policy includes residual disability coverage and you become partially disabled, this feature will continue to pay you income proportionate to your income loss.

When shopping for coverage, be sure that you look for one that doesn’t require a period of total disability before benefits will be paid. The best disability insurance policies include residual benefits that are based on income loss, and don’t require a period of total disability prior to payment of benefits.

In order to qualify for social security disability insurance, you must meet both eligibility and medical requirements. In order to be considered eligible, you must first have worked in a position in which you paid into the social security system for a minimum of ten years.

If you are eligible to participate in the social security insurance program and you become disabled, you will have to apply for benefits. You will be required to complete a formal application process designed to determine if you meet the Social Security Administration’s strict definition of disability.

To be considered disabled, your condition must have lasted, or be expected to last, for a minimum of a year or; to result in death. The condition must have rendered you unable to perform the type of work you did before becoming disabled. Furthermore, you must be unable to perform a different type of work as a result of the medical condition.

Have you stopped to think about how you’ll continue to make your mortgage payments if you or your spouse were to become disabled?  Many people take steps to make sure their families will be able to remain in their homes in the event that one or both of the household’s breadwinners pass away by taking out a mortgage life insurance policy. While this type of coverage can be an important way to look out for your family’s long-term best interests, it’s important to remember that death isn’t the only event that can have a negative impact on your ability to stay in your home.

If you or your spouse becomes sick or injured, and therefore unable to work for a period of time, mortgage disability insurance can be an invaluable resource. It’s a fact that your mortgage payments will have to be made every single month until the balance of your home loan is paid in full, regardless of your health or physical condition. When you have a quality disability insurance policy in place, you’ll be guaranteed access to funds that can be used to take care of your mortgage payments while you’re recovering.

Consumers think disabilities occur more frequently than advisors assume they do.
83% of consumers believe a “disability could happen to anyone at any time,” while only 35% of advisors thought consumers would agree with this statement.  This makes sense to me, in light of the fact that many advisors don’t recommend disability insurance to their clients.

Both consumers and advisors underestimate the true frequency of disabilities.
Consumers think their chances of becoming disabled are only 1 in 100, while a large percentage of advisors estimate those chances as 1 in 10 or 1 in 25.  The actual odds are about 1 in 4.

Both consumers and advisors underestimate how many disabilities are caused by illness.
Many consumers and advisors think injuries cause most disabilities.  However, the facts show that illnesses, such as cancer and heart conditions, are 10 time more likely to be the cause.  As I speak to many consumers about disability insurance, I am not surprised by this answer because I hear it all the time. However, financial advisors should avail themselves of information like that found on the CDA website, as they should be talking about disability insurance with their clients.

Consumers have a more catastophic view of disabilities; advisors recognize shorter-term disabilities are more common.

Nearly 1 out of 3 consumers expect a disability would prevent someone from ever working again, but advisors accurately predict shorter disabilities occur more often due to common causes like chronic disease. back pain and arthritis.

You can find the complete results of the this survey, as well as many other interesting statistics about disability at the CDA Website.  I think their mission to educate the public about disability and disability insurance is a great one.  Its obvious that, in addition to the general public needing more information about this subject, the advisors that serve the public could use it as well.

According tot the Council for Disability Awareness (CDA), 65% of initial SSDI claims were denied in 2009.  Putting it another way, only 35% of initial claims were approved.  For those waiting for their disability checks, that statistic and be quite demoralizing.

I just read a press release about Allsup, a company that assists  people with the SSDI claims process, which can be quite daunting if you attempt to do it by yourself.  The article’s author agrees that most people do, in fact, have their claims denied on the initial submission.  While many people quit trying after the initial application is denied, Allsup recommends that you don’t give up and attempt to appeal the decision.  They suggest that you get good representation for the appeals process.  More than three out of four disability claimants whose cases reach the hearing level have a representative, according to the Social Security Administration.

The article lists the ten biggest mistakes you can make in this process.  Some of them are: Giving up; missing the appeal deadline and reapplying at the initial level; not providing enough information; choosing not to appeal.; and not keeping copies of applications, completed forms and records.  You can see the whole list as well as some other very helpful information at www.allsup.com.

If you work for a living and don’t have disability insurance and have no plans to look into it, these statistics might encourage you to do so:

• Over 1 in 4 of today’s 20-year-olds will become disabled before they retire.
  Social Security Administration, Fact Sheet March 18,2011

• 8.5 million disabled U.s. wage earners were receiving Social Security Disability Insurance (SSDI) benefits.
  Social Security Administration, Office of Disability and Income Security Programs

• 90% of new long-term disability claims are caused by illnesses rather than accidents.
  2011 Council for Disability Awareness Long-Term Disability Claims Study

• Fewer than 5% of accidents are work-related.
  2011 Council for Disability Awareness Long-Term Disability Claims Study

• The average long-term disability claims lasts for 31.2 months.
  2010 GenRe Disability Fact Book

• New applications for SSDI benefits increased 27% between 2008 and 2010.
  Social Security Administration, Office of Disability and Income Security Programs

• About 100 million workers are without private disability income insurance
  Social Security Administration, Fact Sheet March 18,2011

While all these statistics are eye-opening, the one that is the most striking to me is the fact that 90% of disabilities are caused by illnesses, as opposed to accidents. I can’t begin to tell you how many prospective disability insurance clients tell me they don’t need the insurance because they aren’t accident-prone or don’t participate in activities in which they might get injured.  Cancer and heart disease are two major causes of disability and, unfortunately, anyone is prone to them.

I don’t use statistics to scare people into purchasing disability insurance.  However, sometimes I need to pull them out to show people that the chances of disability are greater than they think.  Then, with this information in front of them, they can take the necessary steps to protect their families from income loss due to disability.

The first thing you might want to do is find a broker (such as those that run this website) who represents several disability insurance companies and ask for quotes from each company and a side by side comparison of benefits so you can easily compare the benefits and premiums of each policy.  The major players in the high-quality individual disability insurance market are Guardian (Berkshire), Mass Mutual, MetLife, Principal, Standard and Union Central.  A broker specializing in disability insurance should be able to get you quotes from these companies.

Make sure the broker gives you the financial ratings (A.M. Best, S&P, Fitch and Weiss, to name a few) for each company.  The financial ratings of the company you go with are extremely important, because you want to make sure the company will be around if and when they need to pay claims.

Next, you want to look at the definitions in each policy, as they define how benefits will be paid.  The main definitions you should look at and compare are:

• Total Disability
• Residual Disability
• Recovery Benefit
• Renewability Provisions

Now, you can compare the benefits, company ratings, definitions and cost to determine the best choice for you.  A good broker should be able to walk you through a comparison in fifteen minutes or so.  By the end of that review, you should have a good idea which company is the right fit for you.

If you would like disability insurance quotes from multiple companies with a comparison of benefits, click on the Get Disability Insurance Quotes on the top or bottom of this page.

In a disability insurance policy, as in any insurance policy, the insurance company is taking on a risk. One of the primary risk factor of disability is occupation, as in how much risk does the occupation pose to the insurance company?  A surgeon, for instance, would pose a great risk of disability than a general practitioner.  If both suffered a serious injury to the hand, a surgeon would most probably be disabled (per the definition above), but a physician in general practice might still be able to continue working.

When getting disability insurance quotes or eventually completing your application for a policy, you will be asked for your occupation and, sometimes be required to provide additional information about your daily duties.  If you have several main duties (e.g. managing a company and sales), you might even be asked the percentage of time spent on each.   Some occupations might need to be further delineated by degrees held, size of company you work for and how long you have been working in the same occupation.

Your disability insurance quotes (and ultimately your policy) will include an Occupation Class, indicated by a number.  There isn’t an industry-wide numbering system, so one company might assign you a 4, whereas another might consider you a 5.   The higher the number (of each company’s numbering system), the lower the risk your occupation presents to the insurance company.  In some cases, a higher number might also mean richer policy benefits.

When requesting disability insurance quotes, be as specific as possible with your occupation.  Some occupation titles are self-explanatory (e.g. cardiovascular surgeon) but others might need additional information,  A good example would be “Executive.”  That doesn’t tell the insurance company much about your duties, so additional information would usually be requested.  We often get quote requests listing the occupation as “self-employed” or “business owner” and can’t really do much with that information, as it really doesn’t tell us what the person does at work.

If you would like disability insurance quotes for your occupation, you can start the process by clicking on the Get Disability Insurance Quotes button on the top or bottom of this page.

True Own Occupation:  Due to injury or illness, you cannot perform the material and substantial duties of your Occupation.  You will be considered totally disabled even if you are gainfully employed in another occupation, provided that, due to injury or illness, you are not able to work in your own occupation.

Modified Own Occupation: Due to injury or illness, you cannot perform the material and substantial duties of your Occupation and you are not gainfully employed.

So, the difference in language is easy to see – the main difference between the two is that in the True Own Occupation definition, you can work in another occupation and will still receive your full benefits (as long as you can’t work in your occupation), whereas in the Modified Own Occupation definition, you will no longer receive your benefit for total disability if you go to work in another occupation.

I have to add that, if you have a Residual benefit in your policy, you might be eligible to receive a partial benefit if you are disabled per the policy language and you choose to work in another occupation.  If you choose to work in another occupation and you have a loss of income of at least 20% (or 15%, depending on the policy), you could receive a percentage of your benefit based on your percentage of income loss.

Which Definition is Right for you?

When looking at both modified and own occupation disability insurance, I ask my clients, “if, due to illness or injury, you can’t work at your occupation, could you potentially work in another occupation (remember, this would be your choice – not the insurance company’s)?”  Many times, the answer comes quickly.  A good example would be a surgeon with a hand injury.  Clearly (unless robotics are involved), if a surgeon has a hand injury, he wouldn’t be able to perform surgery, but might want to work in general practice or teach or do something else entirely.  This person would be better suited to a True Own Occupation definition of disability.

However, take an Executive who works mostly at a desk.  If she couldn’t perform the duties of an Executive, the answer to the above question is most often “No.”  In cases like this, especially if there are budgetary concerns, I would recommend the Modified Own Occupation definition (it is less expensive).

You will hear many arguments in the industry as to which definition serves the policy holder better.  I can’t argue with someone who tells me that the true own occupation definition is better than the modified definition because I would agree that a richer benefit is “better” than one that has restrictions on it.  However, the question I ask that person is, “If a benefit is better (and more expensive) but the person doesn’t need it, is still a better benefit?”

The bottom line is, benefits in a disability insurance policy should be tailor-made for each client and their particular needs.  There are a lot of moving parts and cost factors to consider, so make sure you work with an agent/broker who works with several companies and understands this tailor-made concept.  You will probably wind up with the policy and premium that fits your needs.