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Overlooking Disability Insurance Can be Costly

Long-term disability insurance is the forgotten insurance.

The importance of auto, health, homeowners and life insurance is well known. But disability coverage, which replaces lost earnings if you can’t work, tends to be ignored — until you need it.

Government studies show that a 20-year-old worker has a 30 percent chance of becoming disabled before reaching full retirement age. Yet only about a third of employees in private industry have long-term disability insurance, according to the Bureau of Labor Statistics.

‘‘It could be argued that the disability of a breadwinner is worse than the death of a breadwinner,’’ says James Hunt, insurance actuary for the Consumer Federation of America, ‘‘because the disabled person is still soaking up money.’’

That’s why it makes sense to purchase individual coverage if you’re self-employed—or not covered sufficiently or at all by your employer.

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