PSA: Disability Insurance">PSA: Disability Insurance
Insurance companies sell this stuff called “disability insurance.” The bookies at the insurance company will make a bet with you: that you will not become disabled. If they win and you don’t become disabled, you lose the money you’ve paid them. If you win, they pay you a monthly stipend whilst you are disabled.
Insurance-company bookies know odds. For them, financially, disability insurance is a good bet. The chance you will become disabled, multipled by the benefits they will pay if that happens, is smaller than the premium you will pay. Which means that for you, financially, disability insurance is a bad bet.
Four Houston criminal-defense lawyers have suffered crippling strokes in recent years. Americans have about 795,000 strokes a year (I don’t know if lawyers are more susceptible to stroke than others, but sedentary occupation + lots of stress = good candidate for stroke.). When a trial lawyer has a stroke, it’s like a laborer losing a leg or an artisan losing a hand—she might eventually recover her earning capacity, but it’s going to be a long hard road.
The benefit of having that money when you need it most desperately could (assuming that you don’t have savings to burn through during your rehabilitation) be more than just financial. For the lawyer who’s had a stroke, disability insurance might keep the lights on, or keep the mortgage paid, or give some breathing room to a spouse reentering the workforce.
So if you don’t already have a plan in the event of a stroke or other debilitating incident or accident, do yourself, and your loved ones a favor. Put “get disability insurance” on your list of things to do.
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Along the same lines, Aflac is another worthy investment. In some ways its better because it pays benefits based upon life events rather than a total or partial disability. We lawyers are funny people, we see really bad things happen yet seem to think they won’t happen to us.
It’s not a bad bet at all: you’re buying predictability, not investing for a positive return.
Something to bear in mind — albeit more for people who are neither themselves lawyers nor blessed with friends or family members who are — is that part of the gamble insurers make amounts to, ‘how often will we be able to get away with paying out less than promised, or even nothing at all, on this policy?’
I know rather a lot about this, having had short-term disability insurance provided along with health insurance by my former employer. When I developed multiple sclerosis and lost my ability to work, the disability insurance provider went to great lengths to delay even making a response to my claim, so that, after I’d used up all my sick and vacation days for the year, I had no income. I did at least still technically have my job held for me, thanks to the FMLA, and my health insurance… until I was informed via certified mail from my former employer, approximately six months after my onset, that because the disability insurance company had denied my claim, they had concluded that I had no business not coming to work and were therefore terminating my employment.
(Here I’ll note in passing that my former employer’s response to a letter from my then-physician stating that I might be able to work if one or both of two specific accommodations were made, but that absent those accommodations I remained unable to return to work, was to tell me that I had to return to work because the doctor’s letter said I could, even though they refused to implement any accommodations. How much any of this has to do with the fact that the head of HR for my former employer was suffering from either moderately-advanced Alzheimers or some similar memory-afflicting condition is unclear to me, but it is only fair to point out that their malfeasance was more likely the result of incompetence than malice.)
I did still have the option of paying several hundred dollars out-of-pocket per month to continue my insurance coverage, and I did so for several months despite already being at negative household income. The main reason I did so was that, at that point, I still did not have a confirmed diagnosis, and wouldn’t get one until nearly a year later. That may sound suspicious to the average layperson; certainly it seems that it sounded suspicious to my former employer that after months of seeing various doctors and undergoing various tests I still hadn’t been given a specific diagnosis. But MS is only one of DOZENS of illnesses, most of which can strike without prior warning, whose AVERAGE onset-to-diagnosis time is measured in YEARS. I actually received a diagnosis more quickly than most people in my situation!
I’m fairly certain that I could have fought the disability-insurance provider and eventually prevailed, and probably also fought the termination of my employment and eventually prevailed.
But part of what disability-insurance companies base their gambles on is the fact that when they refuse to pay a valid claim like mine, the person making the claim is physically, emotionally and financially exhausted by the time they admit that they’re refusing to pay (not merely delaying payment). I could barely walk across a small room, and even sitting in a chair was difficult. My priority was seeking that diagnosis, and (hopefully) then being able to receive appropriate treatment for what was actually wrong, and MAYBE then pursuing the entities who had taken advantage of my misfortune.
During all of this time, my now-ex-spouse and I were also dealing with trying to keep our utilities on and our bank from foreclosing on our house (this all happened years before the housing bubble) and trying to secure replacement income in the form of state and federal benefits for me, and a second “part-time” 35-hour-a-week job for my now-ex despite our one vehicle being our only means of getting me to medical appointments.
I’m aware that in many cases disability insurance is indeed instrumental in helping people struck by sudden illness or injury not to lose their savings, homes, et cetera. But anyone considering taking out such a policy should also be aware that doing so does not ENSURE that they will receive the expected and contracted assistance if or when it becomes needed…
Yes. This is why I occasionally think that, if I wanted to quit the criminal-defense racket and make some real money, suing insurance companies would be a righteous blast.