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Tag: Disability Insurance

This video for Disability Insurance Awareness Month (DIAM) is probably one of the cheesiest things I have ever seen.  And it is spot on!

Remember, I studied Physics, specifically optics and nuclear engineering.  So I probably have a faily good grasp of how electromagnetic radition (i.e. light at all wavelengths from long radio waves through visible down to UV,  X,  and beyond) effects things.  Things like soft squishy things primarily composed of water, like say a human brain.

Holding an emitting device by your skull for extended periods is not good.  This is your cell phone.

Looking at an emitter for extended periods is not good.  This would be a computer monitor or TV screen.

Sitting with a device on your crotch for long periods is not smart.   That is me tapping away at my laptop right now.

We as a society are bathed in more man made radiation than ever.  No, it is not “dangerous” in that the levels are very low and the frequencies are not at damaging levels.  But just the sheer amount should concern you.

Why is this relative to finance, and specifically Disability Insurance Awareness Month?  Well what is the outcome of us essentially swimming in radiation?  Over time health effects, whether it is cancer, or low sperm motility, or what have you.  The environment we live in is not nearly as friendly as it was even two decades ago, and it will show over the next few decades.

Best way to hedge against this effect: get some disability insurance.  The changing world around us makes it an even smarter move than before.

1.  Because it is worth it.  Assuming you are young, and healthy, and an intellectual professional (attorney, accountant, consultant, engineer, etc) you have about a 1 in 5 chance of being disabled for over 90 days at some point.  Let’s assume that you are disabled for a period where you collect 12 months of benefits.  Thousands of dollars of cash flow to you, for literally a dollar or two a day of cost.  Very high expected return on investment.

2.  Most people don’t need full disability coverage, because they receive some coverage from work.  So supplementing this base coverage is really what you need to do, and probably costs only a beer or two a month.

3.  Females are more likely to collect disability than males, so their costs are generally more.  Reasons?  Having babies is one.  And the fact that women actually go to the doctor as opposed to guys that just suck it up.  And drop dead a bunch of years earlier.

If you are young in your career, your future is bigger than your past.  Disability  Insurance planning is the most critical and overlooked component of financial planning.

Since it is Disability Insurance Awareness Month, let’s take a quick look at how probable is a disability.

I could quote the statistics that disability is more than three times as likely as death prior to age 65, but the vast majority of people won’t understand that.  Nor is I go off on a tangent that buying disability insurance is a Pascal’s Wager (the mathematical opposite of a Fool’s Bet).  But that would be too geeky for anyone but an actuary or a degenerate gambler.

So basically here is how likely it is for you to become disabled if you are under thirty:  take a pair of quarters and flip them.  If they are both heads you lose and get to be disabled, unable to generate income, for a period of at least 90 days.  Thank you for playing, should have spent the ten bucks on disability insurance because now you are financially screwed.

So I couldn’t sleep the other night and was doing work at about 2 a.m. and flipping through channels. I stopped on the movie “Wild Hogs”, specifically when the bad biker gang lead by Ray Liota (what a great bad guy!) was getting ready to fight Tim “The Tool Man” Taylor’s buddies. Liota has a tire iron and yells something along the lines of “Send out the money or I’ll break his legs!”
The geeky buddy yells back “I’m a computer programmer! I can work from a wheel chair!”
“Then I’ll break his hands!”
“Send out the money!”
Funny from my nerd side. But right on target from an insurance perspective in a lot of ways.
Most employers provide disability insurance at a basic level for their employees. But the biggest flaw is that the coverage is typically an “Any Occupation” coverage, as opposed to an “Own Occupation” coverage. What is the difference, and why does it matter?
If you spent four years or more going to college to get a specialized degree such as engineering or accounting or law or medicine, do you want to have to do something else that you are definitely not trained for, and did not spend a gazillion bucks on tuition and tons of time studying for? How would you like to be told “Hey, you can’t use a keyboard anymore, but you can flip burgers. You have to go to work at the Golden Arches because your XYZ Tech Company disability insurance won’t cover you.” Can happen, does happen, saw it happen.
Own Occupation (called own occ in the insurance world) says that if you can not do exactly what you were doing before, you are covered. And typically the benefits will pay monthly for a long time (like out to retirement age), and be adjusted for inflation each year. Sort of protects that investment in education, eh?
Most group coverage uses an Any Occupation definition. Now if it is free and you can not opt out, you should take it because free is good, and you have to take it anyway. But if you can opt out and get your own coverage it will be better for you. Why?
1.Own Occ, like we just talked about.
2.You are younger and healthier than the average employee, so it should cost you less for similar benefits outside the company.
3.It is portable. If you switch companies, you still take your coverage. And if you decide to do something more risky (start your own business, do something less specialized, join a biker gang, etc) you maintain your superior coverage.
4.You are healthy now. You might not be so healthy later, when you are old and fat and married and have kids and mortgages and tons of worries like I do. You can at least get your own Disability Insurance (DI) now, maybe not so later.
All this, for the cost of a beer or two or so a week. Not bad.
Now, if your employer gives you free coverage, take it and supplement it with individual coverage to cover as much of your paycheck as you can, and create additional flexibility for your future by getting a rider on your individual policy to purchase more later when your circumstances change.