Thursday, August 20, 2009

Disability Insurance: Disability Insurance

When you hear the word 'disability', you probably think of mobility loss as an effect of a sudden work or sport mishap. But as we can see from the statistics, the reality is quite different: twice more people become handicapped because of a serious sickness (cancer, diabetes or heart disease) than due to an accident.

Your chances of becoming handicapped

Twice more people under 65 years of age become long-term handicapped than decease due to an accident or illness. But naturally the older is the person, the bigger his/her chances of becoming handicapped are:

* out of every 100 children up to 14 years, 3 are classified as handicapped
* 4% of young people between 15 and 24 years become handicapped
* 7% of adults between 25 and 44 years become handicapped
* 17 in 100 adults between 45 to 64 become handicapped
* 40 in 100 adults 65 and over become handicapped
* 53% of adults older than 75 become handicapped

The current numbers tell us that right now, about 14% of Canadians are classified as handicapped, which is some 4.4 million in real numbers.

What are the advantages of disability insurance?

Different kinds of insurance were created to fit the different needs and situations one might meet. For example life insurance provides adequate amount of money for people who suffer not only from an emotional trauma, but also a change of financial situation after the loss of a close person. In the opposite case, after someone turns (completely) handicapped, the first problem is his/her not being able to keep earning a sufficient salary for themselves and the whole family. Moreover, there are even higher expenses connected to the extra medical and other care the person suddenly needs, which means even more of a financial issue for the family of the person who was once able to support him/herself and now needs specialized care. Thus we can see that a good disability insurance can help you solve even more problems than a life insurance. Being classed as handicapped doesn’t always mean that the person is not able of some kind of employment (see the various definitions of disability), but it has been reported that around 15% of those filing for bankruptcy have done it due to illness or accident. Disabled people can sign up for some government benefits, but this is only a limited option. The coverage group plans don't help to maintain your current wages either, as they usually cover between 50% and 60% of the previous net income.

If you are thinking about applying for disability insurance, first think about the resources you would have in case you couldn't earn a sufficient amount of money.

You might decide to:

* place the confidence in your spouse/family
* spend your savings or retirement funds
* sell your property/other assets
* live on credit
* be sufficiently covered by disability insurance that would supplement the missing income

Illustration: credits to World of Oddy

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