When planning for the future, most people focus on family security and their retirement. They purchase insurance policies, invest in 401Ks and seek other ways to ensure their financial security through their career and into retirement. They do so with the hope of smoothly transitioning into their golden years.
However, a plan is only as good as its implementation. Understanding the terms and conditions of your disability insurance policy is crucial to protecting your financial security. This is especially true given that the Social Security Administration reports that 25% of the American work force will become disabled prior to reaching their natural retirement age.
These statistics are highlighted by disability insurance companies in their marketing materials, which focus on attracting young professionals in their late 20’s and early 30’s. Once purchased, the companies provide copies of the insurance policy, which are often misplaced, or tucked away and never looked at again.
This lack of attention leads to a fundamental disconnect between reality and one’s perception of their coverage. While coverage’s vary greatly by company, policy and rider, most policies with true “own occupation” coverage provide a Total Disability benefit if sickness or injury prevents you from engaging in the material and substantial duties of your occupation prior to the age specified in the contract. Moreover, partial/residual disability insurance riders will provide a proportionate benefit if sickness or injury prevents you from doing some, but not all, of the material and substantial duties of your occupation, and you suffer a specified monetary loss from the same.
It is axiomatic that as we age, our bodies change. Physical impairments, such as arthritis, neuropathy, and radiculopathy, let alone cancer and other debilitating diseases can cause one to reduce their work activity, and/or “retire” prematurely. Similarly, mental health conditions can also develop overtime, causing one to do the same.
Professionals in their 50’s and early 60’s may view their work reduction and/or stoppage as a willful act, rather than accepting their condition as a disability. They do so by using titles such as semi-retired and retired, and they ignore the underlying medical condition driving their unanticipated work reduction. Lack of awareness and/or denial can result in an insured jeopardizing hundreds of thousands of dollars in disability insurance benefits.
To ensure your financial security, it is imperative that you understand the terms and conditions of your policy. A disability insurance policy is a contract, pure and simple. It is governed by the agreed upon coverage. If a medical condition affects your ability to work, you should review your coverage immediately to understand your rights and to protect your financial wellbeing.