The Mid-Career Disability Insurance Market
Workers in the middle of their careers are prime candidates for disability insurance. These workers have growing paychecks and growing responsibilities, so they have ample reason to secure paycheck protection – and if they wait too long, they might not have coverage when they need it.
Disability Insurance for Mid-Career Workers
- Workers in their late 30s to 40s have often established their careers. They’re earning a good living, and they may be using their paychecks to support others. They may be paying off debt while saving for the future. Even if they’re commanding a respectable income, many of them are living paycheck to paycheck.
- If a disability stopped these mid-career workers from earning an income, it could be a financial disaster. Disability insurance provides both protection and peace of mind.
Meeting the Needs of the Sandwich Generation
The term “sandwich generation” doesn’t refer to a specific age group, like Millennials or Gen X. Instead, it refers to adults who are providing for both young children and aging parents.
Many mid-career workers fall into this category. They’re raising a family and paying a mortgage. At the same time, they’re helping out their parents. These workers have a lot of people depending on them, and if a disability prevents them from working, everyone could suffer. If things go wrong, they might not have a safety net because they ARE the safety net.
The more people who depend on your paycheck, the more important it is to protect it with disability insurance.
The Odds and Impact of Disability
Mid-career workers are often still in good health – but that can change in the blink of an eye. Disability can take many forms, including:
- You could hurt yourself while exercising, traveling, doing home repairs, or even just falling down the stairs.
- Musculoskeletal Disorders. Back pain and other musculoskeletal disorders can put you out of commission.
- The risk of heart attacks, strokes, cancer and other illnesses are starting to rise at this age, and the National Cancer Institute says cancer rates are increasing among younger people.
- Mental Illness. Anxiety, depression and other forms of mental illness can also cause long-term disability.
The Social Security Administration says one in four workers will become disabled before reaching retirement age.
If you’re one of the unlucky 25%, you’re looking at major financial disruption due to loss of income and unexpected medical costs. The risk of debt, foreclosure, and bankruptcy becomes real. When you consider you’re long-term earning potential, your paycheck is likely your greatest asset, so it makes sense to protect it.
The Advantages of Securing Disability Insurance in Your 30s and 40s
Workers of any age can benefit from paycheck protection, and buying early can be a smart move. For workers who are in their 30s or 40s and still don’t have coverage, buying disability insurance ASAP can provide several advantages:
- Lock in reasonable rates. If you haven’t developed any significant health problems yet, that’s great – but good health doesn’t last forever. The goal is to buy disability insurance before you develop conditions that cause your rates to increase.
- Have coverage for when you need it. No one knows when disability will strike. If you wait too long, you may not have coverage when you need it.
- Secure peace of mind. Financial worries can keep you awake at night. Knowing that you have paycheck protection in place takes away a major source of stress.
Supplemental Disability Insurance
Some mid-career workers have group long-term disability insurance through work. That’s great – but it’s also limited.
Group long-term disability insurance benefits often only replace around 60% of pre-disability income, and the benefits are often taxed because the premiums were paid with pre-tax dollars. Although some income is better than no income, many people could not make ends meet after such a drastic pay cut. A supplemental disability insurance policy provides additional protection.
Another issue with group long-term disability insurance is that it’s typically tied to a person’s job. If you leave your job, you lose coverage. Many people make the mistake of assuming that they can just buy individual disability insurance when the time comes, but when they actually switch jobs and need coverage, they’re older and have developed health conditions, so coverage is much more expensive. Buying portable coverage while you still qualify for good rates and terms can be a smart long-term strategy.
Group long-term disability insurance is often very affordable, so if your employer offers it, go ahead and accept it – but also consider layering your coverage with a supplemental disability insurance policy.
The Future Purchase Option
When you’re in the middle of your career, you’ve earned some raises and promotions, but more are to come. As your income increases, you’ll want your disability insurance to keep up with larger benefits. With the future purchase option, it’s easy to raise your limits.
The future purchase option rider lets you increase your benefits each year to match increases in your income. The best part of this rider is that you don’t need to undergo medical underwriting. This means you can still qualify for larger benefits even if you’ve developed health problems that would make it harder to buy a new policy.
The Elimination Period Eliminator
Disability insurance policies often have an elimination period of 90 days, and you may not receive your first disability insurance benefit payment for another 30 days. If you couldn’t go four months without a paycheck, this could be a problem – but there are solutions.
- Solution One: Secure a shorter elimination period. The downside is that this will raise the cost of coverage.
- Solution Two: Purchase a critical illness You can use the lump-sum benefit to cover your immediate costs. (A critical illness policy can also be a good option for a stay-at-home spouse!)
The Family Care Benefit
Disability insurance typically only provides a payout if the insured experiences a qualifying disability. However, mid-career workers often need to take time off from work to care for a child, spouse, or parent who’s experiencing an illness or injury.
The family care benefit provides coverage for this. If you have to stop working or reduce your hours to provide care for a family member, this rider can provide a benefit. This can be a good option for workers who would be first in line to provide care for family members.
Do You Need Disability Insurance?
If you’re trying to decide whether disability insurance is right for yourself or a client, ask the following questions:
- How long could you go without a paycheck? Even if you have savings, you can run through that quickly, and then what? Disability insurance provides a safety net.
- Do other people depend on your income? If the answer is yes, disability insurance can protect them as well as yourself.
- How would you have to change your future plans if you couldn’t earn a paycheck? Think about how it would impact your retirement goals, children’s education or other plans, and consider how disability insurance could help.
Do You Need Mid-Career Disability Insurance?
If you’re a worker, an insurance agent can help you find coverage. Find an agent.
Are You an Insurance Agent?
If you’re an insurance agent, DIS can help you serve the mid-career market. Get a quote.
