Millennials and Gen Z’ers are every bit as subject to injury and chronic debilitating disease as their older co-workers. But they are much more likely to be working . . . without disability income insurance.
The typical 20-something needs disability insurance even more than they need life insurance. Young people are more likely to own a life policy than disability coverage, though, for a variety of reasons.
Disability income insurance steps in when a worker can no longer earn a living because of an injury or illness. It is designed to replace a significant fraction of a person’s paycheck — usually 50 to 65% of it — so that the individual can take care of basic necessities until they recover and can actively rejoin the workforce.
Fact: There is a one in three chance that a 20-year-old will be disabled prior to retirement age. But four in 10 workers have no insurance for a disability of any kind, according to information from the Metropolitan Life Insurance Company. That’s a serious disconnect!
A host of diseases regularly strike people in their 20’s,30’s and 40’s and they are more likely to engage in activities that can result in accidents and injuries than their older co-workers.
Younger workers are also more likely to be living paycheck to paycheck. A sudden disability that forces such a person to stop working is a truly devastating event and can suddenly turn into a financial crisis for them.
Health insurance can help pay their doctor bills, but neither health insurance nor long-term care insurance will pay the rent or put food on the table.
Disability insurance, on the other hand, provides money to live on, including paying rent, buying groceries and funding transportation to treatments.
Short-Term and Long-Term Coverages
It is not unusual for workers to receive short-term disability coverage through a policy provided by their employer through work. This covers a portion of the disabled individual’s income for anywhere from a month up to a year — after an exclusion period that typically falls within the employer’s paid time off policy.
Long-term disability coverage kicks in when the disability limits the worker’s ability to earn a living after the short-term policy expires — often after 30, 60 or 90 days. A serious accident that results in bodily injuries can easily require months of rehabilitation before an employee is able to return to work and make a living.
Definitions matter
When it comes to disability insurance, the cheapest policy isn’t always the best deal. Rather, the best deal is the policy that is most likely to pay the claims you are most likely to need covered. For this reason, it’s vitally important to consider more than just premium when choosing which disability policy is best for your needs.
An “own occupation” policy definition will pay benefits if the disability prevents the individual from working in their own profession. An “any occupation” policy definition means the policy will only pay a claim if the insured cannot perform any work which they may be able to do. That may mean “no claim will be paid.”
An “own-occupation” policy is more likely to pay a claim if the insured becomes disabled. All other things being equal, this type of policy is also relatively more expensive. But if you must submit a claim, it may be worth it.
On the other hand, younger workers may have more luck adapting to a different occupation in the event of a disability. So an “any-occupation” policy may be more affordable and make more sense for younger workers.
Getting Approved For Coverage 
Many young workers receive some kind of disability coverage through their employer, but it’s rather limited. People who are independent contractors, self-employed or business owners will need to get their own coverage.
Stricter Underwriting Guidelines
Disability income insurance can be more difficult to obtain in the individual market than other coverages because it’s harder to determine whether a worker is truly disabled and unable to work. Or, not. Why? There’s a higher potential for fraudulent claims with this type of coverage.
Be prepared to answer medical questions, and in some cases, pass a medical exam. Also, be prepared to document your earnings — generally by simply showing your tax returns.
The Best Time To Apply For Disability Insurance . . .
Is BEFORE You Need It
It is important to apply for this type of coverage while you are still healthy and actively working. If you wait until you become disabled due to an illness or bodily injury, it’s like having a car accident and then applying for coverage. At that point, it is too late to get any disability income policy from any insurance company.
LEARN MORE…. call Mary Jakeway or Erica Skog at (844) 573-8089 — Our “Special Team” for DSD Insurance!