How to Protect Your Paycheck

unsplash-workYour chances of being disabled for longer than three months are much greater than you may realize. According to the Social Security Administration, 1-in-5 Americans live with a disability. More than 1-in-4 20-year-olds become disabled before reaching retirement age*. Accidents happen not only on the job but also at home, and illness can strike anyone.

Consider what might happen if you suffered an injury or illness and couldn’t work for days, months, or even years.

  • If you’re single:
    •  Do you have other means of support?
  • If you’re married:
    • Can your spouse’s income support your whole family budget?
  • If you own a business:
    • Is your personal income protected?
    • Is your company protected if an important employee is disabled?
    • Are you protected if your business partner has a long term illness?


Once you become disabled and apply for benefits, you have to wait for a certain amount of time after the onset of your disability before you receive benefits. If you are applying for benefits under a private insurance policy, this amount of time (known as the elimination period) ranges from 30 to 365 days, although the most common elimination period is 90 days. Group insurance policies through your employer will generally have a waiting period of no more than 8 days for short-term policies that pay benefits for up to six months, and 90 days for long-term policies that pay benefits up to age 65.

You can purchase private disability income insurance policies that offer lifetime coverage, some that pay benefits up until age 65 and still others that have two- and five-year benefit periods. Because many injuries or illnesses do not totally disable you, many policies will offer a rider that will pay you a partial benefit if you can work part time and earn some Income.


The amount of individual disability income insurance you should buy depends on three things:

  • How much income you’ll need if you become disabled
  • How much money you can afford to spend on premiums
  • How much insurance you’ll be able to purchase under the insurance company’s guidelines


It’s hard to know exactly how much income you’ll need after you suffer a disability, but you’ll probably need more than you think. Most of your fixed We expenses won’t change, and you may save money on work-related expenses such as clothing, automobile costs, and lunches out. However, you’ll also spend more on other items, including the following:

Medical Expenses:

Assuming that you have health insurance, you’ll probably have to satisfy a deductible as well as an out-of-pocket maximum, which may increase your expenses immediately after your disability occurs.

If you suffer a long-term disability and are forced to quit your job, your group medical insurance coverage may be terminated. If you work for a large enough employer, you may be able to continue coverage on your employer’s plan through the government regulation known as COBRA, but you’ll have to pay the premium yourself, and the coverage cannot last beyond 18 months in most cases. This can add hundreds of dollars to your budget.

You may also need to buy medical equipment or supplies, or even renovate your house to accommodate your disability.

Living Expenses:

You may need to hire household help to take care of day-to-day activities that you can no longer do such as: clean your home, mow the lawn, or cook.

Child-Care Expenses:

You will need to take into account how your child care arrangements may change based on your disability. Will child care expenses increase if you cannot physically care for them anymore?

If you are not sure if you are adequately protected, contact Kuderer Financial to setup a free insurance analysis to verify that your financial security is protected.

*Source: Social Security Administration, The Facts About Social Security’s Disability Program, SSA Publication No. 05-10570 January 2015