financial expenses and disability insurance

Disability and Loss of Income – 10 Expenses to Consider

Disability and the experiencing loss of income has huge financial implications that few are prepared for. Without the ability to maintain a steady income, workers may fall behind on utilities, mortgages, etc. and have trouble making ends meet.

In fact, about 77 percent of consumers (shareable infographic) said they would not be able to pay their bills for more than a year if they suffered a loss of income, according to the Council for Disability Awareness. However, the time those who are disabled are out of work is often more than two years, according to the CDA.

The recent Disability Insurance Awareness Month highlighted the importance of coverage in case you are unable to work. If you have to spend days, months, or even years away from the office, disability insurance could give you the funds to cover that loss of income and pay your bills.

Here are 10 expenses you need to prepare for in case of a disability:

1. Medical Costs

Once you experience a disability, you may be required to visit specialists, perform medical tests and buy medications to help you recover and treat your condition. These expenses would be in addition to your regular expenses you’re expecting to pay. The last thing you should have to think about during a disability is to figure out to pay for treatment.

If you don’t have enough funds in your savings, you may end up resorting to putting charges on your credit card—and you could go into medical debt.

About 43 million consumers  (PDF) have delinquent medical debt on their credit reports, according to the Consumer Financial Protection Bureau.

2. Loss of Income

In the case of disability, not only would you have to cope with medical bills stemming from your injury or illness, you would also have to deal with income losses from missing work and recovering. Some may be fortunate enough to have saved vacation or personal time off, but how long could that last? What do you do when your PTO runs out and you still don’t have a paycheck?

The loss of several paychecks—or more, depending on how long you are out of work—is not to be taken lightly.

3. Utility Bills

Keeping the lights on — and other basic utilities — is a necessity for everyone. A leave of absence from work and the subsequent loss of income may make it harder to pay for gas, heating and electricity. To complicate things, if you’re not working, you’re most-likely stuck at home all the time. The creature comforts, or loss of creature comforts become more noticeable when you can’t escape from them.

Do you have enough emergency savings to cover what could potentially be many months of utility bills?

4. Rent or Mortgage

Housing is usually the biggest single expense for consumers. Also, keeping a roof over your and your family’s head is paramount. You could risk eviction or foreclosure if you fall behind on your rent or mortgage.

Since a disability stretching for more than two-and-a-half years could equal 135 weeks of missed paychecks, you may have to dip into your savings to pay for your housing.

5. Internet and Phone

If you were disabled and couldn’t work, you would still need to account for the services provided by your Internet and phone companies. You still need to stay in touch with family, be able to contact doctors, etc.

You could choose to cut your service package or switch to a lower-cost plan but for most, not having internet or phone is not an option.

6. Food Expenditures

Disabilities often bring on a change in both your budget and your health situation. In either case, you may need to change eating habits or follow a special diet to accommodate your medical condition. While cutting back on dining, food is another one of those things we can’t do without.

7. Transportation and Gas

If you were disabled, you would need to take into consideration how you would get to and from doctor’s appointments, the pharmacy and other places. If you were to find a car too expensive, you might opt to take public transportation instead.

8. Insurance

Although insurance—health, car, home, renter’s, and other policies—often only makes a small dent in your regular paychecks, in the case of a loss of income, you would still need to take this expense into consideration.

Add up how much you would require in cash reserves to stay current on insurance for a yearlong disability or longer.

9. Child Care

If you were disabled with a condition that would mean you needed more child care services, you would need to budget for this higher cost.

For example, if you were disabled, you may need someone else to watch over your children while you visit doctors and other medical appointments.

10. Fees and Interest

While you could put all your household bills on your credit cards, this may be an unsustainable way to pay your expenses in the case of a loss of income.

Not only would you have to deal with rising payments from interest, you also risk having fees from overdrawing on your limit.

All of these considerations make a loss of income resulting from disability a big challenge. But if you carry the proper income protection coverage, you could get back on the job without the added stress of bills piling up in the background.

Source Council for Disability Awareness
Image courtesy of frankieleon 

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