Why You Can't Rely On Public Disability Plans

Article 4 of 8 in What to Know About Disability Insurance

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If you believe that you can pass on private insurance and instead rely on a state disability insurance plan, you are taking a significant risk. In reality, public and state disability insurance plans can fall well short of protecting the needs of a disabled individual. With cut backs in all these programs and more stringent qualifications requirements, the need for individual disability insurance plans is higher than ever before.

TIP: Even if you are able to qualify for a federal or state disability insurance plan, it is not likely to pay for your full insurance needs. The right private disability insurance policy gives you the protection you need to get through your disability.

Why You Can't Depend on Social Security Disability Insurance

Social Security Disability Insurance provides long-term disability benefits based on your salary and the number of years you have worked and contributed to Social Security. However, Social Security disability insurance benefits replace only a limited portion of your salary and the eligibility requirements are very restrictive. To be eligible, all of the following conditions must be met:

1. You have been disabled for five full calendar months;
   
2. Your disability is expected to last at least 12 months or end in death;
   
3. You were unable to be gainfully employed at any occupation, not just your own occupation, at the time your disability began.
   

While Social Security Disability Insurance can be a source of income protection, qualifying for the benefit is difficult because the SSDI definition of disability is very restrictive. In order to qualify for SSDI benefits, individuals must have significant physical or mental impairments that prevent them from engaging in any substantial gainful activity such as:

• Work performed for pay or profit; or
  
• Work of a nature generally performed for pay or profit; or
  
• Work intended for profit, whether or not a profit is realized
  
  

There are two problems with this definition:

1. It requires you to be disabled from any occupation - not just your occupation.
   
2. It sets the bar very low as far as what substantial gainful occupation means. If the social security disability insurance administrators decides you are capable of doing any kind of work that will earn you $1000 per month (2011 figure), then, according to SSDI rules, you are able to perform substantial gainful activity and not eligible for state disability insurance.
   

For example: If you earned $5,000 per month as a skilled craftsman before you became disabled and are no longer able to work as a craftsman, but are still capable of doing some job that would earn $1000 per month, then you do not qualify for social security disability insurance benefits.

Public disability benefit programs such as state disability insurance, Social Security disability insurance and SSDI Insurance provide some protection against loss of income because of disability, but how much these programs might help depends on whether or not you can meet strict eligibility requirements. An individual disability insurance policy is more equipped to get you the coverage you need should you be unable to work due to a disability.

Why You Need to Buy Supplemental Disability Insurance

To give you a more vivid picture of the need for supplemental disability insurance benefits, read some of the following statistics compiled by the Council for Disability Awareness (CDA).

• The approval rate for initial SSDI claims continues to decline. The approval rate fell to 35% in 2009, representing a continued steady decline from 52% 10 years ago.
  
• The CDA Claims Review also found that 31& of individuals receiving private group long-term disability insurance benefits did not qualify for SSDI assistance
  
• 65% of initial SSDI claim applications were denied in 2009. *
  
• Can your family live on $1,065 a month? That's the average monthly benefit paid by Social Security Disability Insurance (SSDI) in June of 2010.
  
• 8% of SSDI recipients received less than $500 monthly.
  
• 52% received less than $1,000 per month on social security disability insurance.
  
• 97% received less than $2,000 per month on SSDI.
  
• Less than 5% of disabling accidents and illnesses are work related. Meaning Workers' Compensation doesn't cover 95% of these injuries
  

Purchasing a supplemental disability insurance plan is important considering how difficult it is to survive on the income provided by SSDI. Supplemental disability insurance is a critical part of your disability coverage.

Benefits of Individual Disability Insurance

Buying an individual disability insurance policy has several benefits:

• You can select how much disability insurance you need
  
• The plan is not based on you continuing to work with your current employer or in the state where you live.
  
• Unlike workers compensation, it is not limited to work-related disabilities.
  
• Since individual disability insurance coverage is only for the person stipulated in the policy, it can be tailored to fit specific needs.
  
• It is easier to qualify to receive benefits under your individual disability plan.
  
  

If you need a quote on an individual disability insurance policy that will give you all the benefits listed above while protecting your income in case of disability, click here to visit the Free Advice quote center today!

* All SSDI statistics are from Social Security Administration, Disabled Worker Beneficiary Statistics, ssa.gov