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Disability insurance and the importance of the paycheck

By: Jamie Miller, Regional Sales Director, Southern California Region (LA/Ventura County)

Almost 8 out of 10 American workers say they live paycheck to paycheck to make ends meet.1 Hopefully, in the event of a sickness or injury, they have medical insurance and supplemental benefits to cover the costs of medical treatment. But, with so many Americans dependent on their paycheck, what happens when that sickness or injury requires a recovery period of weeks or months that keeps them out of work? That’s where Disability Income insurance comes in, but all too often, employees who desperately need financial support are made to wait or the payments they receive aren’t enough.

What really happens when you can’t work?

When you have an injury or accident, the top-of-mind costs are the medical bills, which makes it easy to overlook the cost of missing work while you recover. Again, many Americans need their paycheck to make ends meet, so even one lost paycheck can make a difference. While many companies offer disability benefits, that coverage alone may not be enough. 

For a long-term disability product, there is usually a 90-day waiting period before employees receive benefits. On a bi-weekly pay schedule, that translates to at least six missed paychecks. That’s a huge loss for people living paycheck to paycheck. 

On top of that, with both short- and long-term disability products, most plans are only paying a percentage of the employee’s paychecks. For many, that might not cut it. And, since they pay at a percentage, this, in some ways, means that the most highly compensated employees stand to lose the most strictly from the standpoint of dollars and cents. Being out of work due to sickness or injury is a risk shared equally by all employees regardless of their pay. 

So what really happens when you can’t work? The truth is, relying solely on the basic options offered by employers for disability insurance can be a risky prospect for trying to make ends meet. In some cases, employees may already be behind the eight ball when payments start coming because they have to wait too long for their benefits to kick in.

The answer is to supplement your disability plan

The answer to the problem is pretty straightforward. Employees need the option to purchase a voluntary disability product which can help them bridge the gaps in their existing plans. A voluntary short-term disability product can begin payments earlier than a long-term plan and can also make up the difference in missed income that the employee’s current plan doesn’t cover. Depending on the employee’s situation, a voluntary disability product offers the freedom for employees to tailor their disability protection to their specific needs.

Employees will also appreciate a voluntary plan because it provides them with coverage they can keep even if they change jobs. It’s a permanent solution to the risks presented by being disabled and out of work.

Here at Trustmark, we often say that paychecks are an employee’s most valuable asset. Employees may not think about their paycheck right away when they get sick or injured, but it will quickly come to the forefront when there is no income coming in. With some of the shortcomings of the standard disability products that employers offer, the ability to supplement these plans with a voluntary product can help make sure an employee’s main concern is recovery.

1 Vast numbers of workers live paycheck to paycheck. 2017.

Posted on July 05, 2018 in Sales

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