As an attorney, you probably make a considerable income, and you most likely don’t do any strenuous physical activity that puts you at risk of injury. So, you might think that paying for a disability insurance policy is a waste of money that can be invested more fruitfully elsewhere.
However, that’s not the case.
The same reasons you feel financially safe are the reasons you need a disability insurance policy more than most other people.
Don’t believe that’s the case? Here are a few key points you may be missing and a guide to help you get started in properly securing your wealth.
What Is Disability Insurance for Attorneys?
Disability insurance comes in three forms, but as an attorney, you will likely only be eligible for the two forms of private disability insurance: Short-term and long-term private policies. These are the two options that will be discussed here.
Disability insurance, in the simplest terms, is a form of insurance that financially aids you whenever you are injured or ill and cannot produce income.
Why Do Attorneys Need Disability Insurance?
You may be thinking that financial help due to an unlikely injury isn’t necessary. After all, you’re in one of the highest-earning fields in the nation, and your job doesn’t put you at risk for sudden injuries.
However, just because you’re not an NFL defensive lineman doesn’t mean that you’re invincible. You can be in a car accident with injuries that require months, years, or even your entire life to recover from, or you can develop a serious life-long illness that prevents you from practicing law. Neither of these occurrences is predictable, and they can happen to anyone.
Your high-earning potential is actually the main reason you need it, though. By earning a lot of income, you have earned the ability to live a more comfortable and lavish lifestyle than someone who earns lower wages. If you cannot work, the expenses you’ve accrued don’t suddenly stop. You will still have to pay off financed belongings, cover your school loans, and everything else you’ve amassed with your income.
A high-quality disability policy can ensure that you maintain those responsibilities even when you can’t physically work. In short, it can keep you from down sliding into a dramatically different lifestyle just because life threw a wrench in your well-laid plans.
Not only will this help you keep up with your higher-cost lifestyle, but it will help you continue to grow your aspirations, too. With a proper wealth management service and good decision-making, a high-quality disability insurance plan can keep your life on track regardless of an injury or illness.
How Does Disability Insurance Work?
You’re likely to use two types of disability insurance. While each one is dedicated to different situations, they work almost exactly the same.
You choose a policy provider, a plan, and then pay a fee plus regular premiums to keep your policy active. When you’re injured or otherwise incapable of working due to abnormal circumstances, the policy will kick in and pay you the agreed-upon amount each month.
Depending on your policy and the reason you’re unable to work, the insurance benefits can run out anywhere from 1-year to the point you turn 65 unless they are deemed no longer necessary before they run out.
Once you outlive the benefit limit, you are typically transferred to your retirement plan or another form of compensation in the most extreme cases.
Both of the disability insurance types detailed in this guide are purchased separately, but most insurance providers will offer both of them; allowing you to pay one company rather than two.
How Much Does Disability Insurance for Attorneys Cost?
It’s impossible to pinpoint the exact amount you’ll pay for a policy until you start shopping for one. However, there is a general rule of thumb that you can follow.
Your annual basic insurance cost should be between 1% and 2% of your annual income. In comparison to life insurance, health insurance, and other common forms of insurance, this is extremely affordable.
Your premiums should not exceed 6% of what the policy provider will pay out per month in the event that you claim the insurance. So, if your policy provider will only give you $2000 per month in the event that you’re out of work, your premium fee should not exceed $120.
There is room for a little fluctuation here, but this is generally a good way to measure the quality of an insurance policy.
Also, keep in mind that those low percentage rates will stretch much farther for you due to your higher income scale. Whereas a minimum wage worker would only afford very basic, low-payout plans, 2% of your income is much more substantial.
Most Common Reasons Disability Insurance Is Used for Attorneys
Obviously, you’re not likely to lose an arm or destroy the discs in your back by practicing law. Those risks aren’t part of the job. However, disability insurance isn’t just for serious injuries you develop.
Outside of non-work-related accidents, everyone can experience, the following disabilities are all common uses for disability insurance, and you are susceptible to them.
- Vision or hearing loss
- Heart attacks
- Strokes
- Osteoarthritis
- Mental disabilities such as extreme anxiety, PTSD, and similar conditions that affect functionality in the workplace
- Cancer
While many of these disabilities mostly target older individuals, it’s important to have a policy in place as soon as possible to ensure there are no pre-existing conditions that can disqualify you from coverage or other issues that pop up with late enrollment.
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The Differences Between Short-Term and Long-Term Disability Insurance for Attorneys
You’ll want to look at two different types of insurance policies, and it’s recommended to use them in conjunction with one another. Simply having one or the other leaves glaring weaknesses in your wealth-protection plan, and it can set you up for severe financial shortcomings.
However, there are endless providers for both of these insurance types, and the plans they offer vary dramatically in terms of both rates and overall benefits. So, it’s recommended to seek the help of a professional insurance policy expert before committing to a policy.
Short-Term Disability Insurance for Attorneys
Short-term disability insurance probably isn’t your priority as a lawyer. After all, you’re unlikely to experience the types of injuries that often trigger one of these claims, and if you do, your considerable income probably makes the issue far less financially threatening.
However, this is a key part of protecting your wealth and continuing to live the life you’ve built.
Short-term disability is meant for injuries and illnesses that will put you out of work for more than a couple of weeks but less than a year. In short, if it’s unlikely to heal within 90 days, but less than a year, you can expect your short-term disability policy to cover you throughout that period.
Usually, these are things such as broken limbs, injuries that require surgical correction, pregnancies, and similar issues.
However, short-term disability insurance is good for another reason, too.
In the unfortunate event that you develop a serious illness that will put you out of work for a very long time, or even permanently, you’ll have to make a long-term disability insurance policy claim. That claim will take a considerable amount of time to process.
Luckily, your short-term disability insurance policy will kick in to cover those weeks or even months that you’re left surviving without benefits; keeping you from draining your resources as you wait.
Long-Term Disability Insurance for Attorneys
Long-term disability insurance is like an upgrade to the standard short-term variety. It’s designed to get you through much longer stretches of recovery.
This is more likely what you’ll rely on as an attorney since you are at a lower risk of suffering more immediate injuries, and as you age long-term illnesses become more of a realistic threat.
However, it’s a little more complicated, and given its necessity for you as an attorney, this is definitely the policy that should get the majority of your attention. It can mean the difference between continuing your lifestyle and draining all the resources you’ve built.
The rates you can expect to pay are the same as you would with short-term insurance, and most companies that offer short-term disability insurance also offer separate long-term disability policies. This does mean that you’ll have to pay for two policies, but disability insurance is affordable enough that, that shouldn’t be too much of an issue on a lawyer’s salary.
You’ll also receive your benefits every month just like you do with short-term coverage.
Here are the specifics that differ greatly from short-term coverage.
Length of Coverage:
Short-term disability insurance is meant for short bursts without work. This may be a month, or it may be one year. Long-term disability insurance is meant for much longer situations. Perhaps you will need several back surgeries over the course of five years after a car accident? Long-term disability insurance can cover that. However, it’s also used for situations you might deal with permanently.
A permanent loss of vision or hearing can prevent you from practicing law, and it’s unlikely to be corrected in a lot of circumstances. In that case, you can receive the full range of long-term disability insurance benefits until you reach the limit of your policy. For most, this is the age of 65. After hitting the age limit, it’s expected that you’ll switch to your retirement plan.
So, long-term disability is almost a life-long thing, but it tends to end around the time you would be retiring under normal circumstances. You should know the differences between short vs long term disability insurance.
Processing:
The approval process for long-term disability claims is often far more intensive than it is for short-term disability insurance. With short-term plans, you can typically start collecting benefits almost immediately as long as your injury or illness is easily identified.
With long-term disability insurance, you might have to wait months and comply with testing procedures and various paperwork requirements before your claim is approved. During that time, you will not receive benefits. However, most policies include a backpay clause that ensures you’re compensated appropriately for the time you spent paying for everything out-of-pocket.
This is where a short-term policy comes in handy. Short-term disability policies are easier and faster to claim, and they can be claimed as a transitory form of insurance while you wait for your long-term claim to be approved.
Considering the amount of time it can take for a long-term policy to kick in, and the financial damage it can cause to uphold your living requirements without reliable income coming in, failing to secure a short-term policy can end up derailing years of work at the worst possible time.
Insurance Add-Ons:
Short-term disability policies can include several add-ons, but they’re typically not as necessary due to the short length of coverage you receive.
However, long-term disabilities policies often deal with far more demanding situations with more impactful possibilities attached to them. For example, a cancer prognosis or a heart failure diagnosis can potentially cause death beyond simply putting you out of work.
For this reason, many policy providers offer a tied-in life insurance policy, and sometimes, health insurance may come in an overall insurance package that helps you reduce the rates on all of the included policies. These add-ons are up to the provider, but they are usually offered or available upon request from reputable insurance companies.
Should I Buy Disability Insurance as an Attorney?
Disability insurance is stereotypically marketed towards those who work dangerous jobs or live dangerous lifestyles, but ironically, attorneys can benefit from it the most.
You’re a high-income professional with more earning power than the majority of US citizens. That leads to some expensive upkeep costs and quality of life investments, and those expenses don’t cease just because you’re injured. Even a year or two of maintaining your lifestyle without income can cause irreparable financial damage.
Disability insurance can protect against this, and it can help you continue living the life you’ve earned even if you’re seriously injured or develop an illness.
However, you shouldn’t purchase it alone. As a legal professional, you know how confusing paperwork and contract agreements can be. Just like your clients look to you for help understanding their complex paperwork and contractual obligations; do the same by contacting PolicySolver before you commit to an insurance policy.
Need advice on disability insurance for attorneys? Contact us or schedule a free consultation, and we will get back to you soon!
Sources:
- https://www.policygenius.com/disability-insurance/best-disability-insurance-companies/lawyers/
- https://cck-law.com/blog/how-long-do-long-term-disability-ltd-benefits-last/
- https://www.meetbreeze.com/disability-insurance/how-much-does-disability-insurance-cost/
