Disability income insurance takes care of your most important asset: You


Most people have insurance for their homes, cars and other valuable assets but many don’t consider insuring what pays for those things: their paycheck.

Your ability to earn a living is one of your most important assets. It’s what all your future plans hinge on, including children, a home, a car, vacations and so much more. Disability income insurance will help ensure you’re covered in case the worst should happen.

Think it doesn’t apply to you? Studies have shown that you have a 3-in-10 chance of suffering a disabling illness or injury during your career that would keep you out of work for three months or more.[1]

Think you will be covered by workers compensation? According to a 2010 review by the Council for Disability Awareness, a majority of injuries in the United States happen outside the workplace and therefore do not qualify for state-based workers compensation programs.

These situations can be dire and greatly affect your future. A 25-year-old worker who makes $50,000 a year and suffers a permanent disability could lose $3.8 million in future earnings.[2]

Disability income insurance plays a key part in your overall financial strategy and being covered in case you’re unable to work due to a disability is critical.  Here are some of the different options to consider from Thrivent Financial for Lutherans regarding disability income insurance.


Sources of disability income insurance


Workers Compensation: Provided by your employer in cases where your illness or injury is related to work.  Typically pays around two-thirds of your pre-disability income[3]. However, the vast majority of long-term disabilities are not job related (see chart above).

State Disability Income Insurance Programs: A few states provide short-term disability insurance, typically for six months.  Workers pay for this coverage through payroll deductions.  States offering this are: California, Hawaii, New Jersey, New York, Rhode Island and Puerto Rico.

Social Security: A federal program that covers most workers but qualification for benefits is usually uncertain and payouts are usually modest.  About 65% of applications for Social Security disability benefits are initially denied[4] and the average monthly payout is $1,065[5], barely above the poverty line.

Employer-Sponsored Coverage: The main source of disability income insurance in the United States.  Many employers provide employees with group insurance which often includes Short-Term Disability (STD) and Long Term Disability (LTD).  STD replaces a significant part of your income for usually around three months and LTD will typically pay 40% to 60% of your base salary for longer periods.  Employees are often given the option to add to the baseline coverage that the employer provides to close the gap in income between the total salary and what STD or LTD pays out.

Individual Disability Income Insurance: The most flexible and reliable source of disability income insurance is coverage you purchase on your own for an additional fee.  Individual coverage is portable so you won’t have to worry about new coverage if you change jobs.

Protecting yourself from the unexpected is an important step towards ensuring your long-term financial security and the easiest way to do that is by purchasing disability income insurance.

Thrivent Financial for Lutherans offers a free online disability income insurance calculator to help you assess what your needs are at www.Thrivent.com. Once you have a sense of your disability income insurance needs contact a financial professional who can guide you towards a solution to this gap in your coverage.

Information from the LIFE Foundation was used extensively in this article; you can find more information at www.lifehappens.org.

You can find information about individual plans offered by Thrivent Financial for Lutherans at https://www.thrivent.com/insurance/disability/index.html.


Dana Olson Erickson, ChFC, CASL is a Financial Consultant with Thrivent Financial for Lutherans in Stillwater. She can be reached at 651-439-7091. Thrivent Financial for Lutherans is a Fortune 500 financial services membership organization helping approximately 2.6 million members achieve their financial goals and give back to their communities.  This column was prepared by Thrivent Financial for use by this representative.


Source: Council for Disability Awareness, Long Term Disability Claims Review, 2010

[1] “The Real Risk of Disability in the United States,” Millman Inc., on behalf of the LIFE Foundation, May 2007

[2] LIFE Foundation, “What you need to know about disability insurance” 2011

[3] Christopher J. Boggs ,“Workers Compensation Benefits” http://www.mynewmarkets.com/articles/92109/workers-compensation-benefits, 2008

[4] LIFE Foundation, “What you need to know about disability insurance” 2011

[5] LIFE Foundation, “What you need to know about disability insurance” 2011