Most people buy individual disability insurance to protect themselves and their families. That’s a fantastic reason to purchase coverage – but it’s not the only one. Private disability insurance isn’t just good for policyholders. It also offers an important safety net that can help the country as a whole.
Private DI Helps the Economy
If a disability prevents you from working, the bills don’t stop, but you might have to stop paying them.
Investopedia says loss of income and medical expenses are two of the leading causes of bankruptcy. A disability can easily lead to both medical expenses and loss and income, so it’s not surprising that many people have to file for bankruptcy after a disability.
Bankruptcy might be the best – or perhaps the only – course of action available to people in this situation, but their credit scores will suffer as a result, and this will make long-term financial recovery more difficult. The bankruptcy will also impact the credit card companies, mortgage lenders and other institutions that cannot recover their money. Although these institutions likely assume some individuals will declare bankruptcy and build this into their finances, high numbers of bankruptcies could cause them to tighten their lending requirements, making it harder for others to secure loans.
Private disability insurance helps more individuals stay financially healthy and avoid bankruptcy, and that’s good for the economy as a whole.
Private DI Helps the Workforce
Some disability insurance plans include return-to-work incentives. Return-to-work programs can help ease people back into the workforce. This is clearly beneficial in terms of finances. If people are earning money again, they won’t have to rely on benefits and they can increase the amount they bring home. It may also be good for the workers’ mental health.
Many people build their identities around their job. When they can’t work, they can struggle to find purpose. Their social lives may also suffer because they’re not interacting with their coworkers. Mental health issues may occur, as well. The CDC says that adults with disabilities experience frequent mental distress nearly five times as often as adults without disabilities.
Helping workers return to work is good for the individual worker and the workforce as a whole. These programs can also reduce the burden on federal and state programs. According to an analysis from the Bureau of Labor Statistics, “Increased availability of LTDI plans that provide return-to-work services could reduce reliance on SSDI and other public benefits.”
That brings us to the last point …
Private DI Helps Taxpayers
If the policyholder can no longer work due to a qualifying disability, private disability insurance replaces a portion of the pre-disability income. These benefits can be critical in helping the policyholder stay financially healthy during a period of illness or injury. Without it, many people might be forced to turn to state and federal benefits.
The Social Security Administration says that the trust funds for the Old-Age and Survivors Insurance and the Social Security Disability Insurance benefits are expected to experience a shortfall by 2035. It is not clear what will happen at this time, but funds might only cover 75% of scheduled benefits. It is possible that benefits will be cut as a result, hurting the millions of people who are depending on full benefits.
Other individuals might need to go on Medicaid, SNAP or other public welfare programs. These programs cost the government – and therefore the taxpayers – money. According to the Center on Budget and Policy Priorities, approximately 11%, or $665 billion, of the 2022 federal budget is earmarked for programs that provide aid. That’s a huge amount, and it doesn’t even include health insurance or Social Security programs, which account for another 25% and 21%, respectively.
If more people secure private disability insurance, fewer people will have to rely on public benefits, and this could reduce some of the financial strain on the country’s welfare programs.
Do Your Part to Support the Greater Good
Private disability insurance is good for individual policyholders and for society as a whole. Individual workers can do their part by securing individual disability insurance coverage, employers can do their part by offering disability insurance benefits and insurance sales professionals can do their part by educating businesses and individuals on the need for coverage.
Here at DIS, we want to do our part by making it easy to access private disability insurance. Agents, request a quote.