The Facts About Women and Disability Insurance
Posted by Tom Carolan on Tue, Feb 23, 2010 @ 10:30 AM
FACT:
Women are at a threefold risk of becoming
disabled in the workplace compared to men.
Practically, any woman in the workforce today is in need of disability insurance. From young, single mothers just starting out to established professionals and business owners, disability insurance is an important investment. In fact, as more women realize the importance of it, increasing numbers of companies that care, and especially those run by women, reimburse the cost of individual disability insurance. This allows benefits to be paid tax-free, which is not the case if the company foots the bill through payroll.
Women in the know should even consider maintaining individual disability insurance in cases where employers provide benefits. Upon investigation, it is found that many employee disability plans have tighter restrictions on eligibility than individual plans.
Disability Defined
Essentially, if a policyholder is unable to perform the tasks of her job, due to illness or injury, she is considered disabled and benefits should be paid under disability insurance. However, many policies differ and contain restrictions concerning the degree of disability required. Some policies will not pay out if you can still perform some of your work tasks. This means that if you are bedridden but can talk on a phone and that is a part of your job, you can be denied benefits.
By understanding the fine print that comes with disability policies, you can avoid being stuck in this type of situation. Make sure that the individual insurance policy that you take out covers you adequately and does not make unreasonable demands of you in the case of needing benefits. This may make the difference between being able to follow your doctor's orders or not. In the case of being put on bed rest during a pregnancy, that can make the difference between the life and death of your child.
Women Are More At Risk
Today's women make up 30 to 40 % of household income. In fact, the total of women in the workplace is increasing twice as fast as the number of men in the workplace, says the Bureau of Labor Statistics. However, women are at a much higher risk than men of becoming temporarily or permanently disabled during their work life. Statistically speaking, a 35-year-old professional female has three times the chance of being disabled for a period of over 90 days than a male, says the Journal of the American Society of Certified Life Underwriters.
Unfortunately, there is no law requiring companies to provide long-term disability insurance. Because of this many companies do not do so. If you are lucky enough to work for one of those that do, be sure you understand the policy completely. Apart from restrictions concerning eligibility, many plans pay only up to 60% of your salary. This is often insufficient, especially if you are the primary income in the family.
Another misconception that women must become aware of is that Social Security benefits will take care of them in the case of disability. The 1998 Social Security Handbook outlines the fact that the federal government will only be able to provide benefits after five calendar months have passed. The disability must also stop you from doing any type of paid work. It must also be at least 12 months in duration or be expected to cause death.
How To Determine Sufficient Coverage
Recommendations from the California Department of Insurance on how to figure out how much disability insurance you need begin with a total of all your monthly expenses for necessities. This includes home loans, transportations costs, groceries, utilities and childcare costs. If you have other income such as investment income, you will need to subtract it from this total in order to arrive at your necessary monthly expenditures that need to be covered in the case of disability.
Next you need to total your household income if you were unable to work. This typically includes your spouse's income and any disability benefits you would be eligible for from your employer. If this is equal to or surpasses the monthly expenditures for your household, your coverage is sufficient. If not, you should look at getting disability insurance coverage to at least take care of the difference.
As women become an increasingly important contributor to the family budget, having disability insurance to insure that contribution is a necessity and something that should not be simply overlooked.