Disability Insurance:Lessons from the BoneYard

Suzanna DeBaca -- Expert Business Source, 1/29/2007 6:53:00 AM

I am fascinated by old machinery and equipment, and while channel surfing recently, I found myself entranced by a program on the History Channel called The Bone Yard, which is basically about scrapping massive things, like ships and airplanes.As workers cut through ship bodies and operated colossal equipment, it struck me that this show could have been entitled, “Living Proof that Disability Insurance is Crucial in the Construction Industry!”

As I watched workers tear apart giant old steel ships piece by piece, I was awestruck by the enormous power of the construction equipment, especially something called a Genesis Shear, which cut through ¾” plate steel with ease.  It crunched up warship hulls as if they were milk cartons.My first thought was, “Cool!”

My second thought: “Dangerous!”The show even mentioned the perils involved in these jobs.If you haven’t thought about the risk of disability to yourself or your employees, here are a few points to consider:

1.Work zone safety critical

In all areas of construction, work zone safety is a serious issue and having sufficient insurance coverage for your business is equally critical.According to Curt Grandia in Editor’s Report, December 25, 2006., Midwest Contractor (http://www.acppubs.com/article/CA6400947.html?text=accidents), “ Despite the fact that more than 1,000 people are killed and 40,000 injured each year in work zone accidents across the county, it does not receive enough national attention outside the industry.”

2.Disability Far More Frequent Than Death

Statistics show that between the ages of 22 and 62, the risk of suffering a disability is more than seven times greater than the risk of dying unexpectedly. For a person who is currently 30 years of age, the chances of suffering a disability lasting at least 30 days before age 65 are approximately 75% , according to various sources.

3.Are Group DI and Social Security Enough?

Many companies DI coverage in their group benefits. Typically, this coverage might replace 50-60% of an employee’s income. But could you afford to live at 50-60% of your income?

Social Security provides a modest benefit to disabled workers, but you can’t collect Social Security disability benefits until the end of your fifth full month of disability and only then if you are expected to be out of work 12 months or longer.

In reality, life insurance protects heirs against death, and medical insurance protects against doctor and hospital bills. But what part of your “safety net” protects against the impact of being out of work and unable to earn a paycheck for many months? The answer is disability income (DI) insurance.

In an upcoming column, we’ll examine what specific provisions you should consider when shopping for DI policies.

Suzanna

de Baca is President of Private Capital Solutions Group, a financial and investment firm in Des Moines, Iowa.She is a Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS), 7 Hanover Square, New York, NY10004, (888) 600-4667.Securities products/services and advisory services are offered through PAS, a registered broker/dealer and investment advisor. Private Capital Solutions Group is not an affiliate or subsidiary of PAS.  
PAS is a member NASD, SIPC.

Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal or investment advice. Although the information has been gathered from sources believed reliable, please note that individual situations can vary, therefore the information should be relied upon when coordinated with individual professional advice.