Analysis and Evaluation of Risk Exposure - Evaluating Disability and Health Risks
According to the "Why Disability" booklet published by National Underwriter, men have a 43% chance of becoming seriously disabled at some point throughout their working years, and women have a 54% chance. This accounts for why Disability Insurance is important because the benefits are used to replace the loss of income that occurs when a wage earner becomes disabled.
In most cases, a disability can become more of a financial hardship than an untimely death because unforeseen increased expenses (medical) often go with the loss of income. It is important to be able to distinguish between short-term and long-term disability periods:
Short-term vs. Long-term Disability:
1) Short-term disability- provides coverage for up to two years. Policies typically state the coverage in a number of weeks covered.
2) Long-term disability- coverage provided after the first two years of disability pass. The insured can select policies that have benefit periods that pay till age 65, for a selected number of years, or for life. The longer the period, the more expensive the premiums.
Disability insurance is income replacement insurance; therefore, the monthly benefit amount must be appropriate in comparison with the insured's current income- approximately 60-70% of gross pay. The coverage should be suitable to include both sickness and accidents. If the policy has a coordination with Social Security disability benefits provision, that fact should be considered in the selection process.
One major concern in our country is the rising costs of medical care for employees and their families. Many employers are adopting plans that have higher deductibles and co-pays to help pass some of the cost of insurance down to the employees. Should you decided not to purchase health insurance, you could be facing the risk of high costs of medical expenses, doctor visits, hospital stays, and many other expenses that are typically covered thru the use of medical insurance. Insurance for this protection can be obtained either privately or through the government programs:
Private Health Insurance
Private health insurance is coverage by a health plan provided through an employer or union or purchased by an individual from a private health insurance company.
Employment-based health insurance is coverage offered through one's own employment or a relative's. It may be offered by an employer or by a union.
Direct-purchase health insurance is coverage though a plan purchased by an individual from a private company.
Government Health Insurance
Government health insurance includes plans funded by governments as the federal, state, or local level. The major categories of government health insurance are Medicare, Medicaid, the State Children's Health Insurance Program (SCHIP), military health care, state plans, and the Indian Health Service.