The figures don't lie: Since the year 2000, there has been a 112 percent increase in the amount of government disability claims
submitted. Since 2003, there has been a 29 percent jump in Americans with little or no work experience getting disability payments and a 44 percent increase in claims from people formerly in the workplace. Additionally, there has been a 28 percent increase in claims among veterans since 2008. All in all, in 2011, the federal government paid out almost $250 billion to 23 million Americans for some type of disability claim — and that $250 billion doesn't include workers comp claims, or short-term disability payouts made by states.*
So what does this mean for you?
Unfortunately, the money to pay for all of this has to come from somewhere. You guessed it — they don't call it Social Security disability insurance (SSDI) for nothing. It's projected that the program that handles SSDI claims will run out of money by 2016, with three likely outcomes: a tax hike, a cut to Social Security
benefits or most likely, the funds will come from the general Social Security accounts. And this, coupled with the fact that people are living (and living disabled) longer than ever, could lead to an even faster depletion than initially suspected.
Considering that nearly three-fourths of employees rated the emotional impact of becoming disabled and not being able to work for a living at least an 8 on a 10-point scale, in which 10 means "devastated" (The Principal Financial Well-Being IndexSM, First Quarter 2012), it would be safe to say that this is a prevalent concern. However, with no good news on the horizon, what is the average consumer to do?
Worried yet? Let's pause and take a closer look at the situation.
John F. Kennedy stated, "When written in Chinese, the word 'crisis' is composed of two characters; one represents danger, and the other represents opportunity." With impending volatility in the economy and SSDI, can your clients afford to wait? They will never be healthier or younger than they are right now.
Private disability insurance is customizable and has the flexibility to pay claims that SSDI cannot, such as partial disability claims, own-occupational claims, etc. And as opposed to the federally funded SSDI program, private insurance companies are in the business to pay claims. They have a proven track record of claims-paying ability and more than enough in reserves to make good on all of their contractual obligations. With the Medicare, Social Security and health care debates being waged daily in the media, and not to mention that May is National Disability Insurance Awareness Month
, there is no doubt that these topics are in the forefront of your clients' minds. The message is clear: There is no better time for your clients to purchase disability insurance than right now.
*stats courtesy of CNN Money