In general, whenever we find ourselves speaking with an accountant about the possibility of purchasing a disability insurance policy , the conversation will usually go in one or two different directions.
Say “YES” let’s take a look at my options or, they’ll be more inclined to believe that because being an account isn’t all that “physical” of an occupation, they may be a bit more resistant to idea that they still need to have a Long Term Disability Insurance or even a Short Term Disability Insurance policy in place.
We hate trying to sell someone on the idea of purchasing an insurance policy be it a life insurance policy or a disability insurance policy, let’s just take a moment and discuss why an account would perhaps want to consider purchasing a disability insurance policy on him or herself and discuss a few key terms that they should be aware of so that if they do choose to purchase a disability insurance policy, they’ll be sure to purchase the right one.
Why an accountant should consider purchasing a disability insurance policy.
First off, many of the “causes” which force folks to begin utilizing the benefits of having a disability insurance policy are not “profession specific”. Or to put it another way, cars and cancer don’t care if you’re an accountant or a construction worker. So even though your profession isn’t “labor intensive” you still run the risk of developing a disease which could sideline you from your job and you still run the risk of being injured on the way to your job. So… you never know!
As we’re beginning to learn nowadays, there are a lot of potential health risks associated with just sitting around a computer desk all day long, staring into a computer monitor typing away!
Don’t believe us?
We’ll just consider a moment at how many products are currently being developed to help alleviate work related injuries associated trying to keep someone from avoiding injury at work. Products such as specialized:
- Gel pads for one’s hands and feet,
- Really expensive and FABOUSLY comfortable chairs,
- Stand up desks,
- All sorts of back support devices,
- Etc, etc…
And here’s the thing…
You don’t need to develop cancer of suffer from a horrific traffic accident to be able to benefit from having a disability insurance policy. Which is why before anyone should just “assume” that they don’t need to purchase a disability insurance policy, at the very least, they should have a “decent” understanding of what a disability insurance policy can provide coverage for.
What does Disability Insurance Cover?
The word “disability” covers a lot of things including, but it is definitely not limited only catastrophic injuries such as paralysis. As an accountant, your brain is your biggest asset. And while our goal isn’t to frighten someone into purchasing a policy, it is worth noting (particularly for someone who may be interested in statistics) that around 1.7 million people in the US get a traumatic brain injury each and every year.
Some of these injuries can cause temporary (months to years) or semi-permanent/permanent cognitive disability while other may lead to some type of permanent impairment.
But that’s not all…
Many types of disability Insurance will also cover temporary disability conditions. Conditions that may only cause a temporary disruption to your work. For example, imagine you’re in a slip and fall accident and break your tailbone!
And while breaking…
Your tailbone isn’t going to kill you, let us assure you, if you’ve ever broken your tailbone, the last thing in the world you’re going to want to do is sit around a desk all day!
Which means that…
During this time, you may not be able to go to work, and chances are unless you have some unused sick pay or vacation time that you can cash in, you’re going to get paid until you’re feeling well enough to go back to work.
That said however…
If you had a short-term disability insurance, it’s possible that you would be able to qualify for your benefits and no longer have to worry about where your next pay check was going to come from while recovering from your injury.
Still not convinced to even…
Consider purchasing a disability insurance policy? No problem, let’s just consider some additional statistics for a moment: According to the US Census bureau, approximately 56.7 million Americans (or 19% of the population) had a disability in 2010. And while many might skeptics might choose to argue the validity of many of these cases, the report does go on to show that:
“41 percent of those age 21 to 64 with any disability were employed, compared with 79 percent of those with no disability. Along with the lower likelihood of having a job came the higher likelihood of experiencing persistent poverty; that is, continuous poverty over a 24-month period. Among people age 15 to 64 with severe disabilities, 10.8 percent experienced persistent poverty; the same was true for 4.9 percent of those with a non-severe disability and 3.8 percent of those with no disability.” (Source: Census.gov)
And if you ask us…
this isn’t a where we would want to be particularly if prior to our injury, we had a great career like being an accountant.
What’s the average salary for an accountant? $75,000+
If you’re making that kind of money, then chances are you have the mortgage and car payment to match. But what if your income suddenly comes to a stop, even if for only a few months? That kind of reduction in wages can really have a huge financial consequence on someone’s situation. In some cases, it could trigger a domino affect that could lead to all sorts of undesired consequences.
Many of which…
Could be easily avoided if you choose to purchase the “right” type of disability insurance policy for you and your family. So, assuming that you’re now willing to at least consider purchasing a disability insurance policy, let’s turn our attention to what “type” of disability insurance policy might be right for you and highlight just a few of the pitfalls that could lead you to making a mistake when choosing which company to apply with.
Types of Disability Insurance
First things first, in general, you’re going to have two different options when it comes to the “type” of disability insurance policy that you may choose to purchase. You can either purchase a long term disability insurance policy or you can purchase a short term disability insurance policy.
Short Term Disability Insurance.
Short term disability insurance products that will provide excellent coverage for those suffering from “short” term injuries or illnesses which may cause you to be unable to work for a couple of months up until possibly 2 years at max. When considering purchasing a short term disability insurance policy, knowing what the maximum amount of time you can receive your benefits will be key in knowing whether or not these types of disability insurance policies are right for you.
The problem is…
Unlike life insurance were ultimately we all know we’re going to die one day, when it comes to purchasing a disability insurance policy, we don’t have any idea if we’ll actually ever become disabled. And we certainly don’t know “how long” that disability may last.
This is why…
When working with folks like accountants who have a very specialized profession, which likely required them to complete years of training and education, we’ll usually recommend that they first take a look at a long term disability insurance policy first and then if the cost is prohibitive, then fall back to a short term disability insurance policy instead.
Long Term Disability Insurance.
Long term disability insurance policies are disability insurance policies designed to provide protection for people who become disabled and are unable to work for more than 2 years.
Note: long term disability insurance has higher premiums than short term disability because you will get more out of it should you need it. We almost always recommend accountants to consider long term disability insurance, particularly for those under 50.
Make sense, right? But wait…
Now we want to get into a very important topic that applies to both short term and long term disability insurance. It is here where we will discuss the difference between an “own occupation” vs a “any occupation” policy and explain why it’s SO IMPORTANT to understand what type of occupation your policy is going to cover.
Own Occupation Vs. Any Occupation
In general, we here at Termlife2Go like to recommend that anyone with a highly specialized occupation like being an account first and always pursue an “own occupation” type of disability insurance policy.
We’ll that because with an Own Occupation Disability Insurance, if you are suddenly unable to continue as an account you will be able to qualify for your disability insurance benefits. This is because you are no longer able to perform in your “own occupation”.
If you had purchased an “any occupation” disability insurance policy, the fact that you can no longer perform as an accountant is irrelevant to whether or not you will be able to receive your disability benefit.
With your “any occupation” policy, it is conceivable that while you are no longer able to work as an accountant, it is possible that you may be able to work as a cashier in a fast food restaurant or as a greeter for a major department store.
And while we…
Don’t want to imply there is anything wrong with these two chosen professions, we’re just going to assume that if you were working for $75,000 + a year prior to your injury, the idea of now working for state or federal minimum wage isn’t all that appealing!
Other Terms to Know
Benefit Period: A disability insurance policy will last as long as you’ve signed up for. As mentioned, a short-term benefit period could be anywhere from 3 months to 2 years. A long term benefit period will be 2, 5, 10, or 10+ years. A long-term benefit could also be pegged to a certain age (usually the age you plan on retiring at).
Elimination period: Refers to the amount of time that you must wait from the date that you become disable to the time when your disability insurance policy will begin paying on your claim. If you have a lot of savings, you might not want it to kick in for 2 years. If you do not have much savings, you would want it to kick in as soon as 30 days after your disability. This timeframe is called the elimination period.
Note: the shorter the elimination period, the higher your premiums will be.
Finding the right disability insurance as an accountant.
We wish we could just tell you the right insurance company and the right policy right here in this article. Unfortunately, there is not a one-size-fits-all-accountants type of disability insurance. That’s because all the other variables of your life (age, financial security, dependents, etc) will come into consideration before making the decision of which disability insurance is best for you.
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