You have a one in four chance of this happening during your career.1
A 34% pay cut happens when you go on claim while covered by an employer-paid Group Long Term Disability Plan and that plan pays 66% of your pay. The reason why is that group Long Term Disability benefits are taxable just like your regular paycheck.
Fortunately, there's a solution: Individual Disability Income Insurance that bridges that GAP so that when you get sick or hurt and cannot work, you don't suffer a 34% paycut when you need your money most.
The average long-term disability claim duration is 31.6 months.2
About 90% of disabilities are caused by illness rather than accidents.3
The number one cause of home foreclosure and personal bankruptcy in America today is unpaid medical bills. The dirty secret is that 75% of those that file for this reason had health insurance when they got sick or hurt, but because they were too sick or hurt to work they could not afford to pay the full cost of health insurance after their employer plan coverage stopped (an employer cannot keep you on a group plan forever, and COBRA coverage costs 102% of what your employer pays).4
It doesn't matter how good your health insurance plan is, if you can't afford to pay the premium, the coverage will lapse and you will be responsible for 100% of your medical bills from that point forward.
Just like you insure your car or home, you can get insurance that protects your income. If you become too sick or injured to work, disability insurance can help replace part of your paycheck. Medical insurance pays your doctor — disability insurance pays you.
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1 Social Security Administration, Fact Sheet 2019
2 Gen Re Disability Fact Book
3 Council for Disability Awareness, Long-Term Disability Claims Review, 2011
4 David U. Himmelstein, et al. "Medical Bankruptcy in the United States, 2007: Results of a National Study," Page 741. Elsevier Inc, 2009.