What about income loss due to accident or sickness?

Loss of income due to accident or sickness is a life risk exposure similar to that of the death of a household provider, except that the actual cash need is greater since the disabled provider has ongoing needs in addition to those of the spouse and children.

Disability income insurance pays a benefit when someone is unable to work.  To be more specific, benefit payments are triggered by loss of income as a result of accident or sickness.

What is the potential cost (amount of income lost) to a disabled person and his/her dependents?  According to the 2000 U.S. Census Bureau report, the median annual earned income in the United States in 1999 was $41,994.  Therefore, if an average income earner suffered a disabling accident or sickness for a period of five years the potential loss would be $209,970, not counting increases due to inflation, seniority or promotions.  Of course, an unexpected interruption of income for a period of months or years, could require that investments be liquidated prematurely, or could result in additional indebtedness or other setbacks, causing the actual cost to be greater.  A disability lasting 10 years would cost an average wage earner $429,940 just to replace static wages.  This type of loss would cripple most American families financially.


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