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Disability Insurance: Do not buy it through your employer

The most important asset of a breadwinner is being able to get up and go to work every day. That asset must be protected.

There are many that fall under the misconception that purchasing life insurance is the only insurance need they have. However, if they are disabled by an accident or illness, their income will likely drop as they face costly medical bills and expenses, regardless of insurance.

The odds of being disabled are four times higher than the odds of dying before the age of 65, the typical retirement age.


These are generally the reasons most financial planners will recommend purchasing long-term disability insurance.

It is important that you get your disability insurance through a reputable insurance broker and not through your employer.

If you get your disability insurance through your employer, it is most likely that the policy will be governed by a federal law known as ERISA. Such a policy is nearly worthless. The ERISA law stacks the deck heavily against the employee and in favor of the insurance company.

A recent survey discovered that approximately 89 million people had some type of disability coverage, usually short-term group policies that their employers provide. However, approximately only a quarter of them have long-term coverage, which is supposed pay a monthly benefit if the person is disabled during a stated time period. If these policies are governed by the ERISA law, it will be very hard for the claimant to recover.


Life insurance policies only offer term or permanent insurance with variations of types offered. Disability insurance, on the other hand, is multi-faceted and has different wording for explanations of qualification. One should consult a specialist in disability to aid in understanding and for an explanation of the definitions for benefits, claims, and the company’s ability to pay future benefits when considering coverage.

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