FInancial Protection Do the math. Plan your budget. The first step is to look at your income and expenses. How would they be affected by a period of disability? Consider what would change and what would stay the same. For example, travel expenses might decrease if you were no longer driving to work, but medical expenses would likely increase. Your mortgage, car payment, food and electricity expenses would still need to be paid. Most important, how would you pay for health insurance at a time when you most need quality medical care? When you know all of your costs, you can create a budget, which is the first step in planning for the financial impact of a disability. Consider additional sources of income. Once you have a good understanding of your budget, consider what additional income sources you could access during a period of disability. These could include: • Disability insurance This is provided through employer or professional associations and is the main source of disability income protection in the United States. You may also purchase individual coverage on your own. Be sure to educate yourself, however. Fewer than one in three American workers have long-term disability insurance, and even fewer feel they actually understand it. 3 • Social Security and workers’ compensation If you are employed and become disabled, you may be able to receive Social Security or workers’ compensation payments. However, be aware that more than 60% of initial applications for Social Security disability benefits are denied. And only 5% of disabling injuries actually take place at work. 4 • State disability insurance programs A small handful of states offer a short-term solution — six months to a year of income protection — to residents who have been contributing a premium through payroll deduction. • Personal savings Some people may be able to draw on money they’ve saved. However, a period of disability could quickly deplete any savings, undermining long-term financial goals. 5 And approximately one-third of families have no available savings. Remember: While these income sources can help protect you during a time of disability, they all come with significant limits. Also, any one source of income may not be sufficient to meet your needs during a time of disability.