PART 3 OF 3: DISABILITY AND LIFE-INSURANCE – {CONTINUED FROM PART 2: DISABILITY INSURANCE IS OFTEN MORE IMPORTANT THAN LIFE INSURANCE}

The purpose of these three blogs is to increase your awareness of the potential severe financial impact for people suffering from chronic illnesses or life altering injuries. Either an illness or injury can abruptly end your ability to work and earn a living. Recall that 40% of Americans suffer one or more chronic illnesses.  And many struggle to survive day-to-day expenses and needs. There are actions you can take today to reduce the financial impact of chronic illness.

Last week we discussed the below financial strategies to cope with chronic illness/life altering injuries:

  • USE HSA or FSA FOR OUT OF POCKET MEDICALEXPENSES
  • CREATE AN EMERGENCY FUND
  • STAY ORGANIZED AND REVIEW ALL MEDICAL BILLS FOR ERRORS

This week, we will discuss the below final three strategies:

  • SETTING UP PAYMENT PLANS
  • DISABILITY AND LIFE INSURANCES
  • WAYS TO SAVE AND ASSISTANCE AVAILABILITY

SETTING UP PAYMENT PLANS

Most hospitals offer payment plans based on income.  If your bill is beyond your ability to pay, call your hospital and ask about a payment plan and any assistance programs available. Ask about a no-interest payment plan.  By getting on an affordable payment plan you avoid late fees and lowering YOUR credit score and the hospital collects their dollars, over time.

DISABILITY AND LIFE INSURANCES

DISABILITY INSURANCE

  • At least 51 million working adults in the United States are without disability insurance other than the basic coverage available through Social Security.
  • Only 48 percent of American adults indicate they have enough savings to cover three months of living expenses in the event they are not earning income.
  • More than one in four (25%) of today’s 20-year-olds can expect to be out of work for at least a year because of a disabling condition, before they reach retirement age. 

Long-term disability insurance is the best way to cover the 25 percent chance you may be out of work, due to disability, longer than 90 days, over the course of your career. Disability Insurance can provide security when other forms of income protection, like Social Security disability, short-term disability policies, or workers’ compensation may not. 

By purchasing your plan while young, you have a policy with better coverage than if you wait until you are older. If you wait to buy a policy later in life, it probably will NOT cover any pre-existing illnesses or injuries. And bu waiting you typically pay more for the policy. Insurers usually exclude health issues that could be caused by a pre-existing condition. 

The average cost of Disability Insurance, whether short term or long term, is one to three percent of your annual gross income. If you are making around $100,000 a year in gross income, you will pay approximately $1,000 to $3,000 a year for Disability Insurance.

Here is a link to the US Social Security Disability web page.  https://www.ssa.gov/planners/disability/apply.html

See two earlier blogs on Long and Short Term Disability Insurance.

DISABILITY INSURANCE IS OFTEN MORE IMPORTANT THAN LIFE INSURANCE {1 of 2 PARTS}

DISABILITY INSURANCE IS OFTEN MORE IMPORTANT THAN LIFE INSURANCE {1 of 2 PARTS}

PART 2: DISABILITY INSURANCE RESTRICTIONSAND HOW MUCH $$$ INSURANCE IS NEEDED {CONTINUED FROM: PART 1: INSURANCE SHOULD BE NO MORE OF AN OPTION THAN EMPLOYMENT!

PART 2: DISABILITY INSURANCE RESTRICTIONS AND HOW MUCH $$$ INSURANCE IS NEEDED {CONTINUED FROM: PART 1: INSURANCE SHOULD BE NO MORE OF AN OPTION THAN EMPLOYMENT!}

LESSONS LEARNED CHRONIC ILLNESS PATIENTS – To obtain their disability insurance compensation, majority had to hire attorneys.  The average wait time, if they won, was two or more years. 

LIFE INSURANCE

If you have people to protect in the event of your death, the rule of thumb is to purchase ten times your annual income.  Obviously if you can afford to you can increase this amount. Again, certain pre-existing health conditions may make you ineligible for life insurance. Do your research so you know what is and what is not covered.

Note: Some life insurance and other insurance policies have a clause to lower or eliminate payments when you are disabled.

OTHER WAYS TO SAVE AND ASSISTANCE AVAILABILITY

If you are struggling financially, and already frugal, here are other potential ways to save money:

  • Create a budget and stick to it: Make sure your budget includes your estimated medical/health expenses for each month. Budget more than you ever have before, eliminate unneeded bills, and save any chance you can. 
  • Review your bank accounts regularly: You may find charges you have completely forgotten about or bad charges! Example automatic renewal to memberships (gym, magazines, etc) you no longer utilize.
  • Review all paychecks and other financial information regularly. Mistakes happen! DO NOT PAY for other’s errors.
  • Reduce spending: Groceries are a big budget buster for many people. Look for cheaper grocery stores, use coupons, or buy items in bulk. Find a cheaper cell phone plan or a less expensive Internet package. Many companies are willing to negotiate on prices if you threaten to cancel your account and go elsewhere. My wife periodically does this and has saved us hundreds of dollars.
  • Inform your doctor if you are having financial difficulties. Inform your insurance company if you are dealing with a chronic illness and require more frequent treatments than once or twice a year.  
  • Check out sliding scale/income based clinics.
  • Ask doctors for coupons or samples.  Some doctors are willing to give you these and they help tremendously.  
  • National organizationsyou can try are:
    • 211.orgRun by United Way, 2-1-1 is a hotline that can confidentially connect you to the best local or national resources for a wide variety of immediate needs you may have.
    • Modest NeedsModest Needs provides small, no-strings-attached, financial grants for short-term immediate crisis situations for working families. 
    • Need Help Paying BillsThis website organizes resources based on need, location and eligibility to find help paying bills.
    • Aunt BerthaThis is an extensive, easy-to-use database of resources. Search results are based on your zip code and then categorized by need (food, housing, goods, transit, health, money, care, education, work, legal, etc.).
    • Global GenesGlobal Genes collects resources that might be useful if your have a rare disease, including some patient grants. The organization also provides a great deal of patient education.
    • If you are interested in government assistance, visitbenefits.gov where you can browse program explainers organized by benefit category, state or agency. 
    • BenefitsCheckUpis also a useful resource. The site (from National Council on Aging) helps you navigate mostly federal government programs based on personal information you input. It organizes information and searching by assistance category, including: medications, health care, income, food, utilities and housing.
    • HelpPro The site allows you to search by insurance coverage. You might also ask your medical or insurance provider directly whether they have social work services they can recommend.

CONCLUSION  

If you are suffering from a chronic illness or life altering injury I hope this information is useful.  If you are healthy and believe this cannot happen to you, keep in mind there is a 25 percent change you will one day be impacted.   What if you can no longer work?  Do you have a family depending on your income?  How will you pay your tens of thousands in medical bills?  Where will you live? 

There is a correlation between poverty and chronic illness in the U.S., partly because we do NOT have universal health care system.  Without that universal health care system, you must consider your risk by taking NO action. 

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DISCLAIMER

I am a proud nerd (my beautiful wife and daughter told me so) investment and finance blogger, with University Rutgers, MBA and Harvard University, Advanced Management.  

I am a successful investor in equities and real estate and happy to share my personal finance and investment lessons learned with you. I am NOT however, a licensed financial advisor.  Please do not construe my suggestions on this blog, as recommendations for your personal situation.  For individual finance advice please seek your own licensed CPA or financial advisors.  

Powers Investments Management, LLC

This blog will provide, information and simple strategies, that will assist you to achieve YOUR financial objectives and long term targets. For over 30 years, I solved multi-million dollar problems, for Fortune 10-250, companies. My formal education includes: Business, Finance and Chemical Engineering {Problem Solving} at: Harvard, Rutgers and North Carolina State. And an additional 30+ years, managing my family’s investment decisions. I currently manage/advise people with net-worths ranging from the tens of thousands to several million dollars.

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PART 2: BUILDING A FINANCIAL PLAN FOR LIVING WITH A CHRONIC ILLNESS

A FINANCIAL PLAN FOR LIVING WITH CHRONIC ILLNESS (PART 1 OF 3)

PART 2: DISABILITY INSURANCE RESTRICTIONS AND HOW MUCH $$$ INSURANCE IS NEEDED {CONTINUED FROM: PART 1: INSURANCE SHOULD BE NO MORE OF AN OPTION THAN EMPLOYMENT!}

DISABILITY INSURANCE IS OFTEN MORE IMPORTANT THAN LIFE INSURANCE {1 of 2 PARTS}

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