Five Fast Facts on SSDI: Do You Have A Plan?
In May, Allsup is posting a blog series on Disability Insurance Awareness Month, a time when disability and insurance organizations join forces to raise awareness about the importance of protecting your income after a work-disrupting health issue. This series will take you through Five Fast Facts on SSDI that will help you incorporate these benefits into your overall financial protection plan.
Fast Fact No. 2: If you become severely ill or experience an injury, it’s very important that you have a financial plan on which to fall back for support while you recover.
Without an insurance policy in place, your savings and retirement accounts will quickly be depleted. You may even risk losing assets, like your home or vehicle, in an effort to pay your bills while you deal with your health condition.
That’s where long-term disability (LTD) benefits can come in. LTD can be used as income replacement in the event you experience a severe, work-limiting medical condition. These policies can replace a portion (usually 60 percent) of your lost income during periods of total or partial disability. Benefits are designed to cover essential expenses such as food, clothing, car payments and your mortgage.
Unfortunately, not everyone is covered by an LTD plan. Not all employers offer the benefit, people think they cannot afford an individual plan, or they simply don’t realize how important it is. Yet a number of staggering statistics make clear the value and necessity of LTD coverage:
- At least 51 million working adults have no disability coverage aside from SSDI.
- Only 48 percent of adults have enough savings to cover three months of bills in the event they become disabled and unable to work.
- Only about one-third of employees (32 million) have the financial advantage of LTD coverage through their employer.
- Almost 50 percent of adults can’t pay an unexpected $400 bill without taking out a loan or selling possessions, according to the Federal Reserve Board.
SSDI May Be Your Backup Plan
Fortunately, if you are one of the millions of Americans without LTD coverage, you are likely insured for Social Security Disability Insurance (SSDI).
About 154 million U.S. workers are covered by this federal insurance program, which supports workers who have a health condition severe enough to last at least a year or is expected to result in death.
Our next topic will look at how long it takes to get SSDI benefits. Click here to see our infographic to recognize Disability Insurance Awareness Month in May.