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Don’t count on SSDI for coverage—look into disability insurance

Disability insurance, as we like to point out on this blog, is a more important asset than many Americans realize. Unfortunately, many young Americans are uninformed about the risks of losing their ability to earn income and do not adequately protect themselves from the possibility of becoming seriously injured or ill.

One of the reasons people choose to forego disability insurance is that they belief that they will not get into a situation where they will really need it. Ironically, many of these same people will cover themselves with life insurance, despite the fact that they are much more likely to become injured during their working years than to die.

Others choose to forego disability insurance because they believe they will always be able to fall back on Social Security disability income if they need it. While SSDI is an important resource for many Americans, it would be a mistake to count on it. The reality is that it is not easy to qualify for SSDI, and those who do qualify often have to wait months or even years before they begin receiving benefits.

One important point to note is that private disability benefits do not detract from one’s ability to receive SSDI, though receipt of SSDI may detract from one’s ability to collect private disability insurance, depending on the terms of one’s policy. Those who cover themselves with disability insurance may still be able to qualify for SSDI, but they have the assurance of some coverage rather than taking a gamble. 

Source: Wall Street Journal, “Why Young People Need More Disability Insurance,” September 25, 2014.

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