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Long-term disability insurance can help supplement SSDI

For those with disabilities, keeping up on bills can be difficult when one is unable to work or hours are reduced because of disability. Programs like Social Security disability can help a lot, even if it has its limitations. SSDI is, truly, a fundamental protection against disability, and around 153 million workers are insured by the program through FICA taxes.

SSDI does, though, have a relatively strict definition of disability. One must be unable to work in any capacity, and not merely at one's chosen occupation. Also, the average disability benefit is $1,111 per month. Further, it can also take some time before one is approved.

As a supplement to SSDI, long-term disability insurance is all too often ignored. This is unfortunate, since it really is not that uncommon for disability to prevent one from working at some point. According to government studies, a 20-year-old worker has a 30 percent chance of becoming disabled before reaching retirement age. And yet, only around one third of employees in private industry have long-term disability insurance.

Disability insurance protects workers from a loss of income resulting from an inability to work due to illness or accident. One usually starts receiving disability checks after three to six months of becoming unable to work.

Some people already receive disability insurance through their employer. Whether or not these folks need to purchase additional disability insurance depends largely on whether one can survive on the income checks from employer provided insurance. Commonly, group plans replaces only 40 to 60 percent of one's salary, up to $5,000 per month or $60,000 per year. Benefits can last for either a fixed number of years or until retirement age, depending on the policy. Prices vary depending on age, gender, occupation, amount of coverage and one's health status.

Looking into long-term disability insurance is not a bad idea, even for those that already receive SSDI. The extra income will certainly be helpful when disability keeps one from working.

Source: Businessweek, "Overlooking disability insurance can be costly," Dave Carpenter, July 25, 2012

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