Do You Really Need Disability Insurance Coverage?

While most people like to think the odds of becoming disabled are pretty slim, the U.S. Social Security Administration (S.S.A. fact sheet here) found that a 20-year-old worker has a one-in-four chance of becoming disabled before he or she reaches retirement age. Given this statistic—and the potential impact a long-term disability could have—working adults need financial protection. But how can they get it?

Four sources of long-term disability protection

For most people, there are four potential sources of long-term disability protection–each with its own distinct criteria, benefits, and limitations:

1. Social Security Disability Insurance (SSDI)

SSDI pays benefits to people who cannot work because they have a medical condition that is expected to last at least one year. The program does not cover short-term or partial disabilities and comes with other severe limitations as well–for example, you must be unable to work any job, not just the job you hold, and the benefits are taxed.

2. Workers Compensation

Worker’s comp is a state-administered insurance program that protects employees only if they are injured or disabled while at work and includes partial and short-term disabilities. While benefits vary by state, it is intended to help cover medical expenses, replace lost income, and pay for required rehabilitation.

 3. Workplace (Employer) Coverage

Many large employers provide disability coverage as a workplace benefit which typically covers only 50%-60% of your income and has long waiting periods (up to six months) before you collect benefits. These plans are not portable, and benefits are taxable if your employer pays the premiums.

4. Group Disability Insurance

Like many professional associations, the AIA Trust sponsors disability insurance for AIA members which cover partial disabilities and severe illnesses and are customized to your profession. Importantly, coverage is portable and benefits are not taxed if you pay the premium.

The value of disability insurance

A Life Changed, a Lifestyle Remains is a real-life story that shows just how valuable disability insurance can be.

Single professionals need just as much (if not more) disability coverage. When you can no longer work due to a disability, how will you cover your rent or mortgage, food, and other needs and obligations? Illnesses cause the majority of long-term absences.  If you’re like most Americans, you don’t have disability insurance or enough emergency savings to last 31.2 months. That’s the duration of the average long-term disability claim according to the 2024 Council for Disability Awareness.

As confusing as disability insurance coverage may seem, it’s clear that every working person can benefit from this valuable protection. Find out more about the AIA Trust Disability Insurance including features, costs, eligibility, renewability, limitations and exclusions. Or call Hagan Insurance Group, the Plan Administrator for the AIA Trust program at (877) 801 3727.

CA Insurance License # 0H62489; AR Insurance License # 94726. Underwritten by New York Life Insurance Company, NY NY 10010 on group policy form GMR. NYL-1893783