By Cyril Tuohy
A bipartisan group of lawmakers in Congress has announced the launch of the Congressional Income Protection Caucus to raise awareness about disability risk and the importance of protecting lost income stemming from a disability.
The caucus is led by Sen. Kay Hagan, D-N.C., and Sen. Mark Kirk, R-Ill., along with U.S. Rep. Stephen Fincher, R-Tenn., and U.S. Rep. Carolyn McCarthy, D-N.Y.
Many Americans are underinsured or even uninsured when it comes to protecting their incomes either through individual or employer-sponsored disability coverage. Yet many think nothing of insuring their pets or even their cell phones.
“Many Americans have insurance for their pets and cell phones and nearly all have insurance on their homes and cars. Yet too few Americans – roughly only one third – have insurance on their most valuable asset: their ability to earn an income,” according to a letter co-signed by the lawmakers.
Urging Americans to turn to private disability insurance will also steer taxpayers away from and ease pressure on the Disability Insurance Trust fund. The fund is projected to run out of money by 2016 at current rates.
Alhough disability trust fund expenditures have surpassed receipts in the past, they have done so over the last four consecutive years for the first time.
The fund’s assets are dwindling because there are now only 13 Americans working full time for each worker on disability, according to the Bureau of Labor Statistics. In 1968, there were more than 50 full-time workers for each worker collecting disability.
Independent studies blame the increase of those who qualify as disabled on the expanding definition of disability and aggressive lawyers specializing in pursuing a disability claims.
With the average Social Security Disability Support payment only $1,130 per month, no one should rely on government-issued disability checks to pay bills. Supplementing a taxpayer-financed disability “paycheck” through a private policy is a better private-sector option, according to the caucus.
A disability policy offered through an employer costs an average of $300 a year and saves taxpayers $4.5 billion a year in disability payments, payments that the government and taxpayers otherwise would have to fund.
“Senators Hagan and Kirk, and Representatives Fincher and McCarthy, have it right,” Dirk Kempthorne, president and chief executive officer of the American Council of Life Insurers, said in a news release. “Disability income insurers – indeed, all insurers – augment the public safety net.”
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].
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