Whenever I start writing about “planning” my readers tend to throw rocks at me. I get it, planning ahead is not something people necessarily want to talk about. Although I was writing about having a Plan B many years ago, the absolute urgency of doing it now is an even more of a priority than ever before.
There are many reasons why insureds and claimants should have a Plan B. Just the other day I got a call from someone asking me to follow-up since his check was late. His wife apparently had gone to the grocery store and wrote checks, but no benefit arrived.
Upon checking, it turned out this insured had received a letter back in February (he didn’t pay attention to), informing him that when he reached age 65 his benefits would end. And, so they did. The insured was under the impression benefits would be paid to age 67, or, at least this is what the insurer’s website said.
Disability insurance products are unreliable because it is the insurance company that decides whether you get paid or not, or whether or not you’ve met the criteria in the policy. In other words, benefits can be here today, and gone tomorrow. What will you do then? If benefits end at age 65, will you be able to live on SSDI? Do you have tangible assets that can be used to pay your bills?
It would seem to me that those receiving disability benefits would put having a Plan B a priority on their to-do list. It’s almost as though there is a belief that the disability benefits will ALWAYS be there, so there is no need to plan.
We all know that’s not true. Very few people can actually live off of SSDI/SSR these days. I recommend that insureds sit down with a pencil and a piece of paper. Draw a line down the middle and list all income on the left and expenses on the right. Then cover the income from disability benefits, and reconsider the list.
Here are a few things to think about.
- Will I be able to pay off any existing mortgage and/or credit card debt before my policy ends?
- What tangible assets do I have that I can depend on to pay my bills? (SSDI, dividend and interest payments, annuities etc. land, personal property.) What other personal property do I have that I can sell?
- Do you know where your state resources are, and what the criteria is in order to be eligible? (Food stamps, state aid, free health care etc.)
- Will it be possible for me to live with other relatives if my claim is denied or expired?
- Do I have insurance policies I can cash in or receive an advance on?
- What if, due to national emergencies, SSDI and SSR go away? Where will your resources come from then?
- Does your state support free medical care for the elderly?
- Can I pay off my car and live debt free?
- Should I be prepping and putting food and water aside?
- What am I able to do for work? Part-time? What are my current skills and should I be using this time to learn a trade of some kind?
These and other circumstances should be considered when putting together a Plan B. It’s pretty scary, I know, but there must be some sort of Plan B written down so that life can continue when disability funds go away. And, they will go away at age 65-67. What then? Those with Lifetime benefits aren’t protected either. What if the insurance company goes out of business?
Please don’t allow yourself to be caught off guard without your own personal Plan B. Disability benefits are unreliable, and you want to make sure you have something in your back pocket.
