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Common Shortcomings of Employer Disability Insurance

Our last two blog posts have introduced the concept of disability insurance and how it works. As we have discussed, having disability insurance is essential for everyone who relies on a paycheck to cover life's expenses. However, most people offered employer-subsidized policies rarely think twice about whether or not their insurance policies are sufficient. 


Through today's blog post, we will highlight some of the most common shortfalls of relying on employer-sponsored disability insurance and what you can do to protect future income from uncertainty.


Are you changing jobs, or do you plan to do so?

Employer-sponsored disability insurance is often a free or low-cost option provided at larger firms to enhance the benefits package available to employees. However, like most company benefits, it only lasts WHILE you work for that employer. That means, should you leave that employer, you will lose your coverage and have to hope your next job provides a comparable or better benefit. By having a standalone disability insurance policy, you safeguard your income protection while preserving your career mobility.


Discrimination against pre-existing conditions 

Nowadays, Americans benefit from health insurance that does not discriminate against their pre-existing conditions. Unfortunately, the same is not true for disability insurance. 


When people start a new job, they generally cannot claim coverage for conditions that occurred in the prior six months. That means even if a seemingly benign health condition comes up while you are changing jobs, you may face a denied disability claim if it worsens and prevents you from working. Hence, having a standalone disability policy separate from any employer is essential since it protects you should your health decline. After all, no one should have to stay at a job solely because their health has worsened!


Further limitations of employer-subsidized plans

Protecting your career mobility and income from pre-existing conditions are two of the biggest reasons to consider standalone disability insurance, but they are not the only reasons. 


Further limitations of employer insurance plans include that most plans only replace salary/hourly income (not variable/bonus income), offer shorter payout periods of up to twenty-four months for specific conditions, and change the definition of disability from one's profession to any type of work after a given period. 


For those who have a life-changing health condition or ailment that affects your ability to ever return to work, standalone long-term disability insurance is crucial to consider.


Are you ready to consider a standalone policy?

At Lundeen Abrams Advisors, we provide holistic financial planning that includes helping clients select the correct type of disability policy for themselves. Whether you have an existing standalone policy or one through your work, we are here to help you evaluate your next steps. 


We look forward to talking with you soon!

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